[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]

CLEAN WATER INFRASTRUCTURE FINANCING:
STATE AND LOCAL PERSPECTIVES AND RECENT
DEVELOPMENTS

=======================================================================

(118-30)

HEARING

BEFORE THE

SUBCOMMITTEE ON
WATER RESOURCES AND ENVIRONMENT

OF THE

COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTEENTH CONGRESS

FIRST SESSION

__________

SEPTEMBER 28, 2023

__________

Printed for the use of the
Committee on Transportation and Infrastructure

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation

__________

U.S. GOVERNMENT PUBLISHING OFFICE
54-211 PDF WASHINGTON : 2023

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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Sam Graves, Missouri, Chairman
Rick Larsen, Washington, Eric A. ``Rick'' Crawford,
Ranking Member Arkansas
Eleanor Holmes Norton, Daniel Webster, Florida
District of Columbia Thomas Massie, Kentucky
Grace F. Napolitano, California Scott Perry, Pennsylvania
Steve Cohen, Tennessee Brian Babin, Texas
John Garamendi, California Garret Graves, Louisiana
Henry C. ``Hank'' Johnson, Jr., Georgiavid Rouzer, North Carolina
Andre Carson, Indiana Mike Bost, Illinois
Dina Titus, Nevada Doug LaMalfa, California
Jared Huffman, California Bruce Westerman, Arkansas
Julia Brownley, California Brian J. Mast, Florida
Frederica S. Wilson, Florida Jenniffer Gonzalez-Colon,
Donald M. Payne, Jr., New Jersey Puerto Rico
Mark DeSaulnier, California Pete Stauber, Minnesota
Salud O. Carbajal, California Tim Burchett, Tennessee
Greg Stanton, Arizona, Dusty Johnson, South Dakota
Vice Ranking Member Jefferson Van Drew, New Jersey,
Colin Z. Allred, Texas Vice Chairman
Sharice Davids, Kansas Troy E. Nehls, Texas
Jesus G. ``Chuy'' Garcia, Illinois Lance Gooden, Texas
Chris Pappas, New Hampshire Tracey Mann, Kansas
Seth Moulton, Massachusetts Burgess Owens, Utah
Jake Auchincloss, Massachusetts Rudy Yakym III, Indiana
Marilyn Strickland, Washington Lori Chavez-DeRemer, Oregon
Troy A. Carter, Louisiana Chuck Edwards, North Carolina
Patrick Ryan, New York Thomas H. Kean, Jr., New Jersey
Mary Sattler Peltola, Alaska Anthony D'Esposito, New York
Robert Menendez, New Jersey Eric Burlison, Missouri
Val T. Hoyle, Oregon John James, Michigan
Emilia Strong Sykes, Ohio Derrick Van Orden, Wisconsin
Hillary J. Scholten, Michigan Brandon Williams, New York
Valerie P. Foushee, North Carolina Marcus J. Molinaro, New York
Mike Collins, Georgia
Mike Ezell, Mississippi
John S. Duarte, California
Aaron Bean, Florida

Subcommittee on Water Resources and Environment

David Rouzer, North Carolina,
Chairman
Grace F. Napolitano, California, Daniel Webster, Florida
Ranking Member Thomas Massie, Kentucky
John Garamendi, California Brian Babin, Texas
Emilia Strong Sykes, Ohio, Mike Bost, Illinois
Vice Ranking Member Doug LaMalfa, California
Jared Huffman, California Bruce Westerman, Arkansas
Frederica S. Wilson, Florida Brian J. Mast, Florida
Patrick Ryan, New York Jenniffer Gonzalez-Colon,
Val T. Hoyle, Oregon Puerto Rico
Hillary J. Scholten, Michigan Burgess Owens, Utah
Julia Brownley, California Chuck Edwards, North Carolina
Mark DeSaulnier, California Eric Burlison, Missouri
Greg Stanton, Arizona John James, Michigan, Vice
Chris Pappas, New Hampshire Chairman
Seth Moulton, Massachusetts Derrick Van Orden, Wisconsin
Troy A. Carter, Louisiana Brandon Williams, New York
Eleanor Holmes Norton, Mike Collins, Georgia
District of Columbia Mike Ezell, Mississippi
Rick Larsen, Washington (Ex Officio) John S. Duarte, California
Sam Graves, Missouri (Ex Officio)

CONTENTS

Page

Summary of Subject Matter........................................ vii

STATEMENTS OF MEMBERS OF THE COMMITTEE

Hon. David Rouzer, a Representative in Congress from the State of
North Carolina, and Chairman, Subcommittee on Water Resources
and Environment, opening statement............................. 1
Prepared statement........................................... 3
Hon. Grace F. Napolitano, a Representative in Congress from the
State of California, and Ranking Member, Subcommittee on Water
Resources and Environment, opening statement................... 5
Prepared statement........................................... 7
Hon. Rick Larsen, a Representative in Congress from the State of
Washington, and Ranking Member, Committee on Transportation and
Infrastructure, opening statement.............................. 16
Prepared statement........................................... 17

WITNESSES

Lori Johnson, Assistant Chief, Financial Assistance Division,
Oklahoma Water Resources Board, on behalf of the Council of
Infrastructure Financing Authorities, oral statement........... 19
Prepared statement........................................... 21
Todd P. Swingle, P.E., Chief Executive Officer and Executive
Director, Toho Water Authority, on behalf of the National
Association of Clean Water Agencies, oral statement............ 27
Prepared statement........................................... 29
James M. Proctor II, Senior Vice President, Legal and External
Affairs, McWane, Inc., on behalf of the U.S. Chamber of
Commerce, oral statement....................................... 32
Prepared statement........................................... 33
Rebecca Hammer, Deputy Director of Federal Water Policy, Natural
Resources Defense Council, oral statement...................... 36
Prepared statement........................................... 38

SUBMISSIONS FOR THE RECORD

Letter and Attachments of September 27, 2023, to Hon. David
Rouzer, Chairman, and Hon. Grace F. Napolitano, Ranking Member,
Subcommittee on Water Resources and Environment, from Jack
Waldorf, Executive Director, Western Governors' Association,
Submitted for the Record by Hon. David Rouzer.................. 8
Submissions for the Record by Hon. Grace F. Napolitano:
Letter of September 28, 2023, to Hon. Sam Graves, Chairman,
and Hon. Rick Larsen, Ranking Member, Committee on
Transportation and Infrastructure, and Hon. David Rouzer,
Chairman, and Hon. Grace F. Napolitano, Ranking Member,
Subcommittee on Water Resources and Environment, from James
T. Callahan, General President, International Union of
Operating Engineers........................................ 4
Letter of October 4, 2023, to Hon. Sam Graves, Chairman, and
Hon. Rick Larsen, Ranking Member, Committee on
Transportation and Infrastructure, from Sean McGarvey,
President, North America's Building Trades Unions.......... 75
Letter to Hon. Sam Graves, Chairman, and Hon. Rick Larsen,
Ranking Member, Committee on Transportation and
Infrastructure, and Hon. David Rouzer, Chairman, and Hon.
Grace F. Napolitano, Ranking Member, Subcommittee on Water
Resources and Environment, from Mark McManus, General
President, United Association of Union Plumbers and
Pipefitters................................................ 77
Statement of Patricia Sinicropi, Executive Director,
WateReuse Association...................................... 77
Report, ``Using Clean Water State Revolving Funds for Greening
and Climate Resilience: A Guide for Local Governments,'' by
American Rivers, January 2023, Submitted for the Record by Hon.
Emilia Strong Sykes............................................ 57

APPENDIX

Questions to Lori Johnson, Assistant Chief, Financial Assistance
Division, Oklahoma Water Resources Board, on behalf of the
Council of Infrastructure Financing Authorities, from Hon.
David Rouzer................................................... 79
Questions to Todd P. Swingle, P.E., Chief Executive Officer and
Executive Director, Toho Water Authority, on behalf of the
National Association of Clean Water Agencies, from Hon. David
Rouzer......................................................... 83
Questions to James M. Proctor II, Senior Vice President, Legal
and External Affairs, McWane, Inc., on behalf of the U.S.
Chamber of Commerce, from Hon. David Rouzer.................... 84

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September 22, 2023

SUMMARY OF SUBJECT MATTER

TO: LMembers, Subcommittee on Water Resources and
Environment
FROM: LStaff, Subcommittee on Water Resources and
Environment
RE: LSubcommittee Hearing on ``Clean Water
Infrastructure Financing: State and Local Perspectives and
Recent Developments''
_______________________________________________________________________

I. PURPOSE

The Subcommittee on Water Resources and Environment of the
Committee on Transportation and Infrastructure will meet on
Thursday, September 28, 2023, at 10:00 a.m. ET in 2167 of the
Rayburn House Office Building to hold a hearing entitled,
``Clean Water Infrastructure Financing: State and Local
Perspectives and Recent Developments.'' This hearing will
provide Members the opportunity to hear local and National
perspectives on the current state of clean water infrastructure
financing, including the Clean Water State Revolving Funds, and
analyze recent changes and current issues in clean water
infrastructure financing, including changes and additional
funding provided under the Infrastructure Investment and Jobs
Act (IIJA) (P.L. 117-58).\1\
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\1\ IIJA, Pub. L. No. 117-58, 135 Stat. 429.
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At the hearing, Members will receive testimony from
witnesses representing the Council of Infrastructure Financing
Authorities (CIFA), National Association of Clean Water
Agencies (NACWA), United States Chamber of Commerce, and the
Natural Resources Defense Council.

II. BACKGROUND

CLEAN WATER INFRASTRUCTURE

Clean Water infrastructure construction and maintenance is
integral for local communities nationwide. Industries,
municipalities, households, and other entities all depend on
wastewater infrastructure, including sewer pipe networks, for
collection and transportation and onsite or centralized
treatment facilities, to reduce pollution before being
discharged into nearby waterbodies or reused for water, energy,
or nutrient purposes.\2\
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\2\ See e.g., Am. Soc. of Civil Engineers, 2021 Report Card for
America's Infrastructure, Wastewater Infrastructure, (2021), available
at https://infrastructurereportcard.org/wp-content/uploads/2020/12/
Wastewater-2021.pdf [hereinafter Wastewater Infrastructure Report
Card].
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There are more than 16,000 private and public wastewater
treatment systems nationwide, and approximately 80 percent of
these serve communities with populations of 10,000 or fewer.\3\
As of 2021, per day, 62.5 billion gallons of wastewater are
treated by centralized wastewater treatment plants, a number
that is increasing due to population trend shifts towards urban
communities.\4\ In addition, there is estimated over 800,000
miles of public sewers and 500,000 of private lateral sewers
that connect to public sewer lines nationwide.\5\ Many of the
Nation's wastewater treatment plants were designed with a 40 to
50 year lifespan, and constructed in the 1970s; while
wastewater pipes, which have a typical lifespan of 50 to 100
years, are 45 years old on average.\6\
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\3\ See id.; see also Elena H. Humphreys, Cong. Rsch. Serv.
(R47633), the Role of Earmarks in CWSRF and DWSRF Appropriations in the
117th Congress, (July 25, 2023), available at https://www.crs.gov/
Reports/R47633 [hereinafter CRS Report R47633).
\4\ Wastewater Infrastructure Report Card, supra note 2, at 153.
\5\ Id.
\6\ Id.
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Pursuant to the Clean Water Act (CWA), the United States
Environmental Protection Agency (EPA) periodically reports on
the capital cost of wastewater infrastructure needs.\7\ The
most recent EPA report on wastewater estimates was published in
2016 and estimates that wastewater treatment facilities would
need $271 billion over the next twenty years to continue to
meet Federal standards for water quality.\8\
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\7\ CWA, Pub. L. No. 92-500, 86 Stat. 816 [hereinafter CWA].
\8\ EPA, Clean Watersheds Needs Survey (CWNS) Report to Congress--
2012, (Jan. 2016), available at https://www.epa.gov/sites/default/
files/2015-12/documents/cwns_2012_report_
to_congress-508-opt.pdf [hereinafter CWNS 2016].
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CLEAN WATER ACT BACKGROUND

The CWA is the principal law governing water quality of the
Nation's surface waters and provides a major Federal-state
partnership to do so.\9\ Commonly referred to as the CWA,
Congress enacted the 1972 amendments to the Federal Water
Pollution Control Act with the objective to ``restore and
maintain the chemical, physical, and biological integrity of
the Nation's waters.'' \10\ In doing so, the CWA sets out the
regulatory requirements with which wastewater utilities must
comply.
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\9\ CWA, supra note 7.
\10\ Id.
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In addition to wastewater regulatory requirements, Title II
of the CWA included a grant program that provided funding for
wastewater treatment facilities construction and related
objectives.\11\ This grant program was funded through annual
appropriations and utilized a state-by-state formula included
in the CWA to allocate funds.\12\ States then use the funding
to make direct grants to cities for eligible projects,
typically covering 55 to 75 percent of the total costs.\13\
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\11\ Elena H. Humphreys & Jonathan L. Ramseur, Cong. Rsch. Serv.
(R46892), Infrastructure Investment and Jobs Act (IIJA): Drinking Water
and Wastewater Infrastructure, (updated Jan. 4, 2022), available at
https://www.crs.gov/Reports/R46892 [hereinafter CRS Report R46892].
\12\ Id.
\13\ Id.
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Prior to the enactment of the CWA in 1972, however, the
Federal Government administered a comparatively small aid
program for municipal wastewater infrastructure, whereby the
Federal Government allocated funding to the states based on
population.\14\ A statutory formula for allocation did not
exist.\15\
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\14\ Jonathan L. Ramseur, Cong. Rsch. Serv. (R47474), Clean Water
State Revolving Fund Allotment Formula: Background and Options, (Mar.
15, 2023), available at https://www.crs.gov/Reports/R47474 [hereinafter
CRS Report R47474].
\15\ Id.
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In contrast, under the CWA Title II program, Congress
appropriated nearly $52 billion between Fiscal Year (FY) 1973
and FY 1990, the largest nonmilitary public works
appropriations since the Interstate Highway System.\16\
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\16\ CRS Report R46892, supra note 11.
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III. CLEAN WATER STATE REVOLVING FUNDS (CWSRF)

Throughout the following discussion, it is important to
highlight that the CWSRF program is not to be confused with the
Drinking Water State Revolving Fund (DWSRF) program, which is
part of the Safe Drinking Water Act, and was authorized as part
of the Safe Drinking Water Act Amendments of 1996.\17\ The
Committee on Transportation and Infrastructure holds
jurisdiction over the CWSRF, while the Committee on Energy and
Commerce holds jurisdiction over the DWSRF.
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\17\ See Safe Drinking Water Act Amendments of 1996, Pub. L. No.
104-182, 110 Stat. 1666.
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Noting the amount of investment that had gone into
wastewater infrastructure, Congress amended the CWA through the
Water Quality Act of 1987.\18\ These amendments to the CWA
established the Clean Water State Revolving Fund (CWSRF)
program, which today serves as the primary Federal program for
wastewater infrastructure funding.\19\ The Water Quality Act of
1987 authorized the CWSRF program and appropriations to
capitalize state revolving loan funds as Title VI of the CWA,
in the process phasing out the Title II grant program after FY
1990.\20\
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\18\ Water Quality Act of 1987, Pub. L. No. 100-4, 33 U.S.C.
Sec. Sec. 1381-1387.
\19\ Id.; see also CRS Report 47474, supra note 14.
\20\ CRS Report R47633, supra note 3; see also EPA, About the Clean
Water State Revolving Fund (CWSRF), available at https://www.epa.gov/
cwsrf/about-clean-water-state-revolving-fund-cwsrf [hereinafter About
the CWSRF].
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Through the CWSRF program, each state and Puerto Rico
maintain revolving loan funds to provide low-cost financing for
approved water quality infrastructure projects.\21\ State
revolving funds (SRFs) are available to make low-interest
loans, buy or refinance local debt, subsidize or insure local
bonds, make loan guarantees, act as security or guarantee of
state debt, earn interest, and pay administrative expenses.\22\
SRF monies may also be used to implement other water pollution
control programs such as nonpoint source pollution management
and the National Estuary Program.\23\
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\21\ Jonathan L. Ramseur, Cong. Rsch. Serv. (R46471), Federally
Supported Projects for Wastewater, Drinking Water, and Water Supply
Infrastructure, (updated Aug. 2, 2022), available at https://
www.crs.gov/Reports/R46471 [hereinafter CRS Report R46471].
\22\ Id.; see generally About the CWSRF, supra note 20.
\23\ Id.
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Funds to establish or capitalize the CWSRF programs are
provided through Federal capitalization grants and state
matching funds (generally equal to 20 percent of Federal
grants).\24\ States primarily use their funds to provide loans
to cities and other eligible recipients. As a loan program, the
CWSRFs are intended to be supported through the repayment of
loans to states over time, creating a continuing source of
assistance for other communities, in contrast to straight
appropriations.\25\ Loans are made at or below current market
interest rates, including zero interest loans, and vary by
state, applicant, and circumstance.\26\
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\24\ Id.
\25\ Id.
\26\ Id.
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Although the CWSRF generally involves loans from the state
to local wastewater actors, states are also authorized to
provide ``additional subsidization'' to projects and their
sponsors.\27\ Additionally, states may also use CWSRF grants to
provide additional subsidization for projects falling under
specific categories of infrastructure projects, such as for
reasons of water or energy efficiency.\28\ In practice, this
``additional subsidization'' has taken the form of principal
forgiveness and/or loans with negative interest.\29\
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\27\ 33 U.S.C. Sec. 1383(i); see also CRS Report R46892, supra note
11.
\28\ See CRS Report R46892, supra note 11.
\29\ Id.
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Since FY 1989, Congress has provided more than $56 billion
in Federal capitalization assistance to the states.\30\ In
turn, this infusion of Federal capital to SRFs has leveraged
over $153.6 billion in direct assistance to communities through
44,555 agreements.\31\ According to EPA's latest data, in 2021
alone, states funded over 1,700 new wastewater infrastructure
projects totaling more than $8.2 billion through the CWSRF in
2021.\32\
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\30\ See CRS Report R47474, supra note 14.
\31\ EPA, CWSRF 2021 Annual Report, (Dec. 2022), available at
https://www.epa.gov/system/files/documents/2022-12/2021-CWSRF-Annual-
Report.pdf [hereinafter CWSRF Annual Report].
\32\ Id.
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IV. RECENT DEVELOPMENTS

In the past two decades, Congress has enacted several
amendments to the CWA to promote the implementation and
construction of wastewater infrastructure. Most recently, the
Infrastructure Investment and Jobs Act (IIJA) reauthorized
appropriations, provided supplemental funding, and amended the
CWSRF program.\33\ However, there are still other current
issues that Congress and stakeholders are interested in.
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\33\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58,
135 Stat 429 [hereinafter IIJA].
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In 2009, Congress enacted the American Recovery and
Reinvestment Act (ARRA) to stimulate the United States economy
and address a range of other policy objectives.\34\ The ARRA
provided $4 billion in supplemental funding for the CWSRF for
wastewater infrastructure projects, required states to use at
least 50 percent of ARRA funds for additional subsidization,
and authorized the ``green reserve,'' \35\ which required
states to use at least 50 percent of ARRA grants ``for projects
to address green infrastructure, water or energy efficiency
improvements or other environmentally innovative activities.''
\36\
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\34\ American Recovery and Reinvestment Act, Pub. L. No. 111-5, 123
Stat 115.
\35\ See e.g., Green Project Reserve Guidance for the Clean Water
State Revolving Fund (CWSRF) (last updated May 19, 2023), available at
https://www.epa.gov/cwsrf/green-project-reserve-guidance-clean-water-
state-revolving-fund-cwsrf.
\36\ Id.; see also CRS Report R47474, supra note 14.
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In the Water Resources Reform and Development of 2014
(WRRDA), Congress amended the CWA to authorize CWSRF-eligible
projects to include measures to manage, reduce, treat, or
recapture stormwater; replacement of decentralized treatment
systems such as septic tanks; energy-efficiency improvement at
treatment works; reusing and recycling of wastewater and/or
stormwater; and security improvements at treatment works.\37\
WRRDA also allowed states under certain conditions to provide
additional subsidization up to 30 percent of the state's
allotment.\38\
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\37\ Water Resources Reform and Development Act, Pub. L. No. 113-
121, 128 Stat. 1322 [hereinafter WRRDA]; CWA Sec. Sec. 601(b)(13),
603(d)(1)(E), 603(i)(1)(B), 122, 603(c); see also CRS Report R47474,
supra note 14.
\38\ WRRDA, supra note 34; see also CRS Report R47474, supra note
14.
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America's Water Infrastructure Act of 2018 (AWIA) amended
the list of activities eligible under the CWSRF program to
allow nonprofits to aid certain individuals for projects on
existing decentralized wastewater systems or to connect an
individual household to a centralized wastewater system.\39\
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\39\ America's Water Infrastructure Act of 2018, Pub. L. No. 115-
270, 132 Stat. 3876.
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Additionally, in recent years, the annual appropriations
bill for the EPA has included additional requirements for
states to use a portion of CWSRF funds for additional subsidies
and for the green reserve.\40\
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\40\ See e.g. Consolidated Appropriations Act of 2023, Pub. L. No.
117-328, 136 Stat. 4793, (requiring states, to the extent that there
are sufficient projects or activities eligible for assistance, to
utilize not less than 10 percent of their CWSRF capitalization grant
for projects to address green infrastructure, water or energy efficient
improvements, or other environmentally innovative activities).
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INFRASTRUCTURE INVESTMENT AND JOBS ACT (IIJA)

IIJA made several changes to the CWSRF program. For the
first time since Congressional authorization for the program
expired in 1994, section 50210(b) of IIJA reauthorized a total
of $14.65 billion in Federal appropriations for the CWSRF
program between FYs 2022-2026.\41\
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\41\ IIJA Sec. 50210(b), at 135 Stat 1169, supra note 33.
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Division J, Title IV of IIJA provided $11.7 billion in
supplemental appropriations from FYs 2022-2026 for the CWSRF
program, separate from the authorized level for annual
appropriations.\42\ Additionally, IIJA provided $1 billion in
supplemental appropriations set aside specifically to address
emerging contaminants.\43\
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\42\ Id. at 135 Stat. 1396.
\43\ Id.
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IIJA also included other requirements for how CWSRF funds
are to be spent. Section 50210(a) explicitly reserved a portion
of CWSRF funds to be distributed as grants or grant substitutes
to economically disadvantaged communities and for the
implementation of energy-efficient or water-efficient
technologies.\44\ States are required for their supplemental
IIJA appropriations to use 49 percent of their SRF
capitalization grant amount as 100 percent principal
forgiveness and grants.\45\ For the supplemental appropriations
to address emerging contaminant projects, states are required
to use 100 percent of their capitalization amount as principal
forgiveness or grants.\46\
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\44\ Id. at 135 Stat 1169; see also H. Comm. on Transp. &
Infrastructure, Jurisdiction and Activities of the Subcomm. on Water
Res. and Environment, 118th Cong., (2023) (on file with Comm.)
[hereinafter Jurisdiction and Activities Report].
\45\ See CRS Report R47633, supra note 3; see also CWSRF Annual
Report, supra note 31.
\46\ See CRS Report R47633, supra note 3; see also CWSRF Annual
Report, supra note 31.
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OTHER CURRENT ISSUES

During the 117th Congress, providing funds directly to
communities for wastewater infrastructure projects through
community project funding resumed.\47\ Some stakeholders are
concerned about the way these funds have been targeted, as the
annual appropriations bills for FYs 2022 and 2023 dedicated
part of the CWSRF funding directly to community project
funding.\48\ Prior to the new practice, earmarked funds were
provided separately from SRF appropriations.
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\47\ See CRS Report R47633, supra note 3.
\48\ Id.
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Although the CWA originally directed EPA to publish a Clean
Watersheds Needs Survey (CWNS) biennially, the last CWNS was
published in 2016, documenting wastewater infrastructure needs
from 2012.\49\ IIJA directed EPA to conduct a needs assessment
for all CWSRF-eligible projects by November 2023, and every
four years following.\50\
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\49\ CWNS 2016, supra note 8; see also CRS Report R47474, supra
note 14.
\50\ CWA, supra note 7, Sec. 609.
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The funding allocation percentages when the CWSRF program
was originally created generally remain in effect today.\51\
Although the legislative history does not contain a specific
analysis of the numbers behind the allocation formulas, the
formula represents a negotiation between the House and Senate
and provide each state with at least half of a percent of the
total appropriation in any given year.\52\
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\51\ CRS Report R47474, supra note 14.
\52\ Id.
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V. OTHER CLEAN WATER INFRASTRUCTURE PROGRAMS

Although the CWSRF program is generally considered the
principal Federal source for wastewater project funding, a
number of related authorities for funding exist.
The Water Infrastructure Finance and Innovation Act (WIFIA)
authorizes EPA to provide direct loans or loan guarantees for a
wide range of drinking water and wastewater projects.\53\ In
contrast to the CWSRF, under this authority, EPA provides
credit assistance directly to eligible project recipients and
may fund projects that may be ineligible for CWSRF assistance
or are too large for traditional CWSRF funding.\54\
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\53\ WRRDA, supra note 37; see generally EPA, What is WIFIA?,
available at https://www.epa.gov/wifia/what-wifia; see also CRS Report
R46471, supra note 21.
\54\ CRS Report R46471, supra note 21.
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The Consolidated Appropriations Act of 2001 authorized EPA
to establish a new grant program in the CWA to address combined
sewer overflows, sanitary sewer overflows, or stormwater.\55\
Projects under this grant program are subject to the same
requirements as the CWSRF program. This authority received its
first Federal appropriations in FY 2020.\56\ IIJA also amended
this grant program, requiring EPA to work with states to use at
least 25 percent of grant awards on projects in rural
communities with populations of fewer than 10,000 and
financially distressed communities, as defined by each
state.\57\
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\55\ Consolidated Appropriations Act of 2001, Pub. L. No. 106-554;
CWA Sec. 221; see also Jurisdiction and Activities Report, supra note
44.
\56\ Jurisdiction and Activities Report, supra note 44.
\57\ Id.; IIJA, supra note 33, Sec. 50204.
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VI. WITNESSES

LMs. Lori Johnson, Assistant Chief, Financial
Services Division, Oklahoma Water Resources Board, on behalf of
Council of Infrastructure Financing Authorities
LMr. Todd P. Swingle, P.E., Chief Executive
Officer and Executive Director, Toho Water Authority,
Kissimmee, FL, on behalf of National Association of Clean Water
Agencies
LMr. James M. Proctor II, Senior Vice President
and General Counsel, McWane Inc., on behalf of United States
Chamber of Commerce
LMs. Rebecca Hammer, Deputy Director, Federal
Water Policy, Natural Resources Defense Council

CLEAN WATER INFRASTRUCTURE FINANCING: STATE AND LOCAL PERSPECTIVES AND
RECENT DEVELOPMENTS

----------

THURSDAY, SEPTEMBER 28, 2023

House of Representatives,
Subcommittee on Water Resources and Environment,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m. in
room 2167 Rayburn House Office Building, Hon. David Rouzer
(Chairman of the subcommittee) presiding.
Mr. Rouzer. The Subcommittee on Water Resources and
Environment will come to order.
I ask unanimous consent that the chairman be authorized to
declare a recess at any time during today's hearing.
Without objection, so ordered.
I also ask unanimous consent that Members not on the
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
Without objection, so ordered.
As a reminder, if Members wish to insert a document into
the record, they can email it to DocumentsTI@mail.house.gov.
Again, that's DocumentsTI@mail.house.gov.
I now recognize myself for 5 minutes for the purposes of an
opening statement.

OPENING STATEMENT OF HON. DAVID ROUZER OF NORTH CAROLINA,
CHAIRMAN, SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT

Mr. Rouzer. First, thank you to our witnesses for being
here today. I am eager to hear from you on the issues local
communities are facing in their efforts to address the Nation's
water and wastewater infrastructure needs. Specifically, I am
most interested in hearing your insights on water
infrastructure financing, especially the current condition of
the Clean Water State Revolving Funds, or SRFs, as they are
commonly known.
Our clean water infrastructure is something most Americans
don't think about, but rely on 24/7. Ask anyone who has ever
dealt with a sewer backup how important wastewater
infrastructure is. In many cases and in many communities, these
water and wastewater systems are long past their design life
and in need of critical repairs, upgrades, or total
replacement. As a result, leaks and blockages are all too
common across the Nation and represent a massive waste of a
vital resource.
These needs are especially urgent for hundreds of
communities trying to fix the problems of combined sewer
overflows and sanitary sewer overflows. Wastewater
infrastructure deficiencies are particularly acute in many
small and rural communities. There are more than 16,000 private
and public wastewater treatment systems nationwide, and
approximately 80 percent serve communities with populations of
10,000 or less. For example, in my district there are almost
100 communities with 1,000 residents or less, including the
town of Chadbourn in Columbus County. Chadbourn, interestingly
enough, has wastewater systems as old as their date of
incorporation, which was 1883. The Clean Water SRF program has
allowed them to maintain their systems while they pursue long-
term solutions.
According to the EPA's last ``Clean Water Needs Survey
Report to Congress,'' the total documented needs for
sustainable wastewater infrastructure, combined sewer overflow
and sanitary sewer overflow correction, and stormwater
management nationwide are at least $270 billion over the next
two decades.
In my home State of North Carolina alone, there is a
documented need of $11 billion for clean water projects. To
further underscore the need, coastal and low-lying inland
communities in southeastern North Carolina experience frequent
storms resulting in flooded rivers and watersheds, which often
leave water and drainage systems in need of total repair and
future mitigation.
These investments are expensive and cannot be handled by
simply authorizing and appropriating the same or larger amounts
of Federal funds. The Infrastructure Investment and Jobs Act
recognized the importance of the Clean Water SRF program, but
simply pumped more money at the problem without addressing some
fundamental shortfalls. While Federal, State, and local
investments are necessary, new approaches are needed to solve
these problems. Integrated planning and greater regulatory
flexibility can help communities struggling to address their
needs and meet compliance mandates, while also reducing
financial burdens currently levied on ratepayers.
When the Clean Water SRF program was created in 1987, the
authors understood States and localities are the experts in
addressing their own clean water infrastructure challenges. By
setting up loan programs, States and localities would be able
to leverage more financial resources for decades to come, much
easier than relying on direct appropriations. So, it is
important that we maintain and abide by the intent of this
longstanding loan structure to continue responsibly addressing
wastewater infrastructure needs decades into the future. To
divert more and more of these funds to grants will make the
program unsustainable and, in the end, help no one.
The current set-asides for grants and grant substitutes
passed in IIJA will ultimately be harmful to the program,
slowly draining the funds States have been able to leverage for
decades under the traditional low-interest loan structure. When
combined with unfunded mandates and burdensome regulations
driving up baseline costs, it puts the long-term viability of
the Clean Water SRF in question.
Wastewater infrastructure is incredibly important for my
constituents and those of every Member of Congress. The Clean
Water SRF is a great example of good public policy that helps
keep wastewater costs down and provides reliable service for
many communities and ratepayers around the country. In order to
maintain a good clean water infrastructure well into the
future, a robust and effective program is key.
So, I look forward to hearing from our witnesses today
about how we can improve our clean water infrastructure,
protect against environmental degradation, keep wastewater
costs low for ratepayers, and address the challenges brought
about by recent legislative changes surrounding the Clean Water
SRF program.
[Mr. Rouzer's prepared statement follows:]

Prepared Statement of Hon. David Rouzer, a Representative in Congress
from the State of North Carolina, and Chairman, Subcommittee on Water
Resources and Environment
I'd like to first thank our witnesses for being here today--I am
excited to hear from the members of this panel on the issues
communities are facing in addressing the nation's water and wastewater
infrastructure needs. Specifically, I am interested in hearing your
insights on water infrastructure financing, especially the current
condition of the Clean Water State Revolving Funds (SRFs).
Our clean water infrastructure is something most Americans don't
think about every day but rely on 24/7. Just ask anyone who has ever
dealt with a sewer backup how important our wastewater infrastructure
is.
Indeed, in many communities, these water and wastewater systems are
long past their design life and in need of critical repairs, upgrades,
or total replacement. As a result, leaks and blockages are all too
common across the nation and represent a massive waste of a vital
resource. These needs are especially urgent for hundreds of communities
trying to fix the problems of combined sewer overflows and sanitary
sewer overflows.
Needs for improvement in wastewater infrastructure are especially
the case for many small and rural communities. There are more than
16,000 private and public wastewater treatment systems nationwide, and
approximately 80 percent serve communities with populations of 10,000
or fewer. In my district, there are 95 communities with less than
10,000 residents, including the Town of Chadbourn in Columbus County.
Chadbourn has wastewater systems as old as its date of incorporation:
1883. The Clean Water SRF program has allowed them to maintain their
systems while they pursue long-term solutions.
According to EPA's last ``Clean Water Needs Survey'' report to
Congress in 2016, the total documented needs for sustainable wastewater
infrastructure, combined sewer overflow and sanitary sewer overflow
correction, and stormwater management nationwide are at least $270
billion over the next two decades.
In my home state of North Carolina alone, there is a documented
need of $11 billion for clean water projects. To further demonstrate
these needs, coastal and low-lying inland communities in southeastern
North Carolina experience frequent storms resulting in flooded rivers
and watersheds, often times leaving water and drainage systems in need
of total repair and future mitigation.
Even by congressional standards, these investments are expensive
and cannot be handled by simply authorizing and appropriating the same
or larger amounts of federal funds. The Infrastructure Investment and
Jobs Act (IIJA) recognized the importance of the Clean Water SRF
program, but just threw money at the problem without addressing the
shortfalls of the current programs. While federal, state, and local
investments are necessary, new approaches are required to solve these
problems.
Novel methods such as integrated planning and greater regulatory
flexibility can help communities struggling to address needs and meet
compliance mandates while also reducing financial burdens currently
levied on ratepayers.
When the Clean Water SRF program was created in 1987, the authors
understood states and localities are the experts in addressing their
own clean water infrastructure challenges. By setting up loan programs,
states and localities would be able to leverage more financial
resources for decades to come, easier than relying on direct
appropriations. It is important that we maintain the longstanding loan
structure to continue responsibly addressing wastewater infrastructure
needs decades into the future. To do otherwise will make the program
unsustainable.
The current set-asides for grants and grant substitutes passed in
IIJA will ultimately be harmful to the program, slowly draining the
funds states have been able to leverage for decades under the
traditional low-interest loan structure. When combined with unfunded
mandates and burdensome regulations driving up baseline costs, the
long-term viability of the Clean Water SRF is in doubt.
The bottom line is that wastewater infrastructure is incredibly
important for my constituents and for my colleagues here today. The
Clean Water SRF is an example of good public policy that helps keep
wastewater costs down and provides reliable service to those around the
country. In order to maintain robust clean water infrastructure now and
in the future, a robust and effective program is critical.
I look forward to hearing from our witnesses today about how we can
improve our clean water infrastructure, protect against environmental
degradation, keep wastewater costs low for ratepayers, and address the
challenges brought about by recent legislative changes surrounding the
Clean Water SRF program.

Mr. Rouzer. So, I yield back and now recognize Ranking
Member Napolitano for 5 minutes for an opening statement.
Mrs. Napolitano. Thank you, Mr. Chairman. I have a letter
to insert into the record from the International Union of
Operating Engineers.
Mr. Rouzer. Without objection, so ordered.
[The information follows:]

Letter of September 28, 2023, to Hon. Sam Graves, Chairman, and Hon.
Rick Larsen, Ranking Member, Committee on Transportation and
Infrastructure, and Hon. David Rouzer, Chairman, and Hon. Grace F.
Napolitano, Ranking Member, Subcommittee on Water Resources and
Environment, from James T. Callahan, General President, International
Union of Operating Engineers, Submitted for the Record by Hon. Grace F.
Napolitano
September 28, 2023.
The Honorable Sam Graves,
1135 Longworth House Office Building,
Washington, DC 20515.
The Honorable Rick Larsen,
2163 Rayburn House Office Building,
Washington, DC 20515.
The Honorable David Rouzer,
2333 Rayburn House Office Building,
Washington, DC 20515.
The Honorable Grace F. Napolitano,
1610 Longworth House Office Building,
Washington, DC 20515.
Dear Chairmen Graves and Rouzer and Ranking Members Larsen and
Napolitano:
Over two years ago the Council of Infrastructure Financing
Authorities testified in the Water Resources and Environment Committee
that compliance with Davis-Bacon Act prevailing wages was not ``an
issue.'' Since then, more than 10,000 workers have been cheated out of
their wages, and the Wage and Hour Division of the Department of Labor
has recovered nearly $30 million in back wages. Clearly, Davis-Bacon
compliance is an issue for these workers.
The International Union of Operating Engineers (IUOE) represents
400,000 working men and women in North America, thousands of whom build
and maintain water, wastewater, and other critical infrastructure
throughout the United States. Members of the IUOE perform millions of
hours of work annually building wastewater systems financed by the
Clean Water Act-State Revolving Fund program. Stationary engineers of
the IUOE also maintain and operate wastewater systems in private and
public settings across the country. The IUOE is also a longstanding
member of the nation's largest, oldest water-infrastructure advocacy
coalition, the Water Infrastructure Network.
Contrary to the Council of Infrastructure Finance Authorities'
(CIFA) argument that payment of prevailing wages ``is not an issue,''
cheating on prevailing wages is rampant. In the last decade,
enforcement efforts at the Department have resulted in the recovery of
more than $229 million in back wages for over 76,000 workers. If
compliance with this fundamental wage law was not a problem, one would
reasonably expect higher levels of compliance.
Importantly, the Biden Administration has undertaken a major effort
to streamline the regulations to implement this pillar of American
labor law. In March 2022 the Biden Administration began a rulemaking
process to update Davis-Bacon regulations for the first time in over
forty years, modernizing the law and further streamlining its
implementation. In a few short weeks, the rule is scheduled to go into
effect, delivering major efficiencies to the administration of the
Davis-Bacon Act and streamlining the ``conformance'' process for making
wage determinations.
In fact, in 2011, the Government Accountability Office acknowledged
CIFA's concerns regarding ``conformances.'' The GAO report ``identified
dissatisfaction among regulated parties regarding the rigidity of the
Department's county-based system for identifying prevailing rates, and
missing wage rates requiring an overuse of ``conformances'' for wage
rates for specific job classifications.'' It is one of the many issues
addressed in the DOL's new rule.
In its final rule, the Department says that it `` . . . agrees with
commenters that addressing timeliness issues and the overuse of
conformances are important goals. The use of BLS data, however, could
cause its own problems with missing classifications . . . ''
Essentially, DOL dismissed the solution presented by CIFA and the
Associated Builders and Contractors. Instead, ``the Department is
adopting new methods of reducing the need for conformances and more
frequently updating wage determinations, including through the limited
use of BLS data where it can reasonably be used to estimate wage-rate
increases in between voluntary surveys.''
The administrative requirements of the Davis-Bacon Act are critical
to the prevention of fraud against government agencies and necessary to
ensure that government contractors do not profit by failing to pay the
minimum wage--the wage floor--to which construction workers are
entitled. It is worth noting that the submission of certified payrolls
through the Davis-Bacon Act serves as the only additional protection
afforded taxpayers against kickbacks, misclassification, and the
employment of unauthorized workers on taxpayer-funded public projects.
In conclusion, the Davis-Bacon Act continues to play a key role in
the lives and livelihoods of America's construction workers. It is an
``issue.'' The administrative costs to comply with the Davis-Bacon Act
are minimal and are being streamlined by the Biden Administration now,
bringing the law's administration into the 21st century.
The International Union of Operating Engineers appreciates the
support of the committee and the clear bipartisan recognition of the
role that the Davis-Bacon Act plays to support blue-collar workers.
Please do not hesitate to reach out should you need technical
assistance with the nation's fundamental labor standard for federally
assisted construction, the Davis-Bacon Act.
Thank you for your consideration.
Sincerely,
James T. Callahan,
General President, International Union of Operating Engineers.

OPENING STATEMENT OF HON. GRACE F. NAPOLITANO OF CALIFORNIA,
RANKING MEMBER, SUBCOMMITTEE ON WATER RESOURCES AND ENVIRONMENT

Mrs. Napolitano. Thank you very much for holding today's
hearing to showcase the critical clean water investments made
by the Bipartisan Infrastructure Law known as the BIL. Thank
you for being a great partner, Mr. Chair.
Last Congress, House Democrats worked with the Biden
administration to provide the largest investment in our
Nation's crumbling infrastructure in over a generation. With
each dollar invested and each new water infrastructure project
implemented, everyday Americans in your district and mine
realize the benefits of the transformational Bipartisan
Infrastructure Law with cleaner and safer water and a more
resilient and more livable environment.
For example, my congressional district in L.A. County is
using BIL funding to carry out a list of long-awaited projects
that benefit our community, our local economy, and our
businesses and industries that rely on clean, safe, and
resilient water for their success.
In just the past 2 years since the BIL was signed, Los
Angeles County has announced numerous partnerships with the
U.S. Environmental Protection Agency, the State of California,
and local utilities to invest in our water-related
infrastructure.
In May of 2022, the county closed a $441 million WIFIA loan
that will support the Clearwater Project--a joint water
pollution control plant effluent outfall tunnel project that
will reduce flooding risks and prevent the contamination of
local drinking water sources.
In July of 2023, Los Angeles Sanitation District was
awarded close to $2 million from EPA's brownfields program that
will allow the district to clean up oil-related contamination
at a former industrial site to repurpose the property as a new
wastewater recycling project.
Through both the BIL and the historic annual appropriations
for the Clean Water SRF program, the county is moving forward
on several wastewater and water recycling projects, including
$266 million for the Advanced Water Purification Facility
(AWPF) that will produce 19 million gallons per day of purified
wastewater for groundwater recharge at Hansen Spreading Grounds
in the San Fernando Valley, a major source of water supply for
the city's drinking water.
Mr. Chairman, these are just a few of the thousands of
examples of critical water-related investments happening all
across America because of the BIL. And, because House Democrats
specifically tailored these BIL investments to address the
unique affordability concerns facing many minority, rural, and
Tribal communities, all Americans, regardless of zip code, can
benefit from these investments and have access to clean, safe,
and reliable drinking and wastewater services.
Yet, Mr. Chairman, I remain concerned with the direction
our current House leadership is taking towards sustaining these
critical investments in the future. For example, the majority
party has already pulled back from the bipartisan budget
agreement reached earlier this year to avoid a governmental
default, and now, on the precipice of a pointless Government
shutdown, is advocating for deep draconian cuts to programs
that benefit hard-working Americans. I am very strongly opposed
to the proposed 40-percent cut to EPA's budget advanced by the
majority and the likely equivalent reduction in protecting our
clean water.
Mr. Chairman, as our witnesses today will reiterate, the
strength of the American economy is reliant on clean water. It
is a key ingredient for manufacturing, farming, food
processing, small business development, tourism, and
recreational businesses. If we do not protect our Nation's
waters, this will have a negative impact on businesses, as they
will not have the high-quality water they need for production
and growth.
The decline of water quality will also require consumers,
businesses, and residents to pay more in water utility bills to
treat water before it comes to the tap.
Mr. Chairman, House Democrats proudly support continued
investments in our clean water future. Now is not the time to
pull back on Federal investments in our wastewater
infrastructure.
I welcome our panelists here today and look forward to
their valuable testimony.
[Mrs. Napolitano's prepared statement follows:]

Prepared Statement of Hon. Grace F. Napolitano, a Representative in
Congress from the State of California, and Ranking Member, Subcommittee
on Water Resources and Environment
Thank you, Mr. Chairman, for holding today's hearing to showcase
the critical clean water investments made by the Bipartisan
Infrastructure Law.
Last Congress, House Democrats worked with the Biden administration
to provide the largest investment in our nation's crumbling
infrastructure in over a generation.
With each dollar invested and each new water infrastructure project
implemented, everyday Americans in your district and mine realize the
benefits of the transformational Bipartisan Infrastructure Law with
cleaner and safer water and a more resilient and more livable
environment.
For example, in my congressional district, Los Angeles County is
using BIL funding to carry out a list of long-awaited projects that
benefit our community, our local economy, and the businesses and
industries that rely on clean, safe, and resilient water for their
success.
In just the past two years since the BIL was signed, Los Angeles
County has announced numerous partnerships with the U.S. Environmental
Protection Agency, the State of California, and local utilities to
invest in our water-related infrastructure.
In May of 2022, the County closed a $441 million WIFIA loan that
will support the Clearwater Project--a joint water pollution control
plant effluent outfall tunnel project that will reduce flooding risks
and prevent the contamination of local drinking water sources.
In July of 2023, Los Angeles Sanitation District was awarded close
to $2 million from EPA's brownfields program that will allow the
district to clean up oil-related contamination at a former industrial
site to repurpose the property as a new wastewater recycling project.
Through both the BIL and the historic annual appropriations for the
Clean Water SRF program, the County is moving forward on several
wastewater and water recycling projects, including $266 million for the
Advanced Water Purification Facility (AWPF) will produce 19 million
gallons per day of purified wastewater for groundwater recharge at
Hansen Spreading Grounds in the San Fernando Valley--a major source of
water supply for the City's drinking water.
Mr. Chairman, these are just a few of the thousands of examples of
critical water-related investments happening all across America because
of the BIL.
And, because House Democrats specifically tailored these BIL
investments to address the unique affordability concerns facing many
minority, rural, and tribal communities, all Americans, regardless of
zip code, can benefit from these investments and have access to clean,
safe, and reliable drinking and wastewater services.
Yet, Mr. Chairman, I remain concerned with the direction our
current House leadership is taking towards sustaining these critical
investments in the future.
For example, the majority party has already pulled back from the
bipartisan budget agreement reached earlier this year to avoid a
governmental default, and now, on the precipice of a pointless
government shutdown, is advocating for deeper, draconian cuts to
programs that benefit hard working American families.
I am strongly opposed to the projected 40 percent cut to EPA's
budget advanced by the majority--and the likely equivalent reduction in
protecting our nation's clean water.
Mr. Chairman, as our witnesses today will reiterate, the strength
of the American economy is reliant on a clean water.
It is a key ingredient for manufacturing, farming, food processing,
small business development, tourism and recreational businesses. If we
do not protect our nation's waters, this will have a negative impact on
business as they will not have the high-quality water they need for
production and growth.
The decline of water quality will also require consumers,
businesses, and residents to pay more in water utility bills to treat
water before it comes to the tap.
Mr. Chairman, House Democrats proudly support continued investments
in our clean water future. Now is not the time to pull back on federal
investments in our wastewater infrastructure.
I welcome our panelists here today and look forward to their valued
input.

Mrs. Napolitano. I yield back.
Mr. Rouzer. The gentlelady yields back.
While I have the opportunity, I ask unanimous consent to
enter into the record a letter sent on September 27, 2023, by
the Western Governors' Association addressed to myself and
Ranking Member Napolitano outlining the Western Governors'
collective policy recommendations for clean water
infrastructure financing.
Without objection, so ordered.
[The information follows:]

Letter and Attachments of September 27, 2023, to Hon. David Rouzer,
Chairman, and Hon. Grace F. Napolitano, Ranking Member, Subcommittee on
Water Resources and Environment, from Jack Waldorf, Executive Director,
Western Governors' Association, Submitted for the Record by Hon. David
Rouzer
September 27, 2023.
The Honorable David Rouzer,
Chairman,
Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure, House of Representatives,
585 Ford House Office Building, Washington, DC 20515.
The Honorable Grace F. Napolitano,
Ranking Member,
Subcommittee on Water Resources and Environment, Committee on
Transportation and Infrastructure, House of Representatives,
2165 Rayburn House Office Building, Washington, DC 20515.
Dear Chairman Rouzer and Ranking Member Napolitano:
With respect to the Committee's hearing scheduled for September 28,
Clean Water Infrastructure Financing: State and Local Perspectives and
Recent Developments, attached please find Western Governors'
Association (WGA) Policy Resolutions 2021-10, Water Quality in the
West, and 2021-08, Water Resource Management in the West. These
resolutions include Western Governors' collective and bipartisan policy
recommendations concerning the financing of clean water infrastructure.
The Clean Water Act (CWA) and the Safe Drinking Water Act (SDWA)
have been the cornerstone of ensuring that Americans can access
reliable and clean water. Investments in water delivery and wastewater
infrastructure are essential to our nation's continued prosperity and
environmental protection. In upholding the cooperative federalism
model, Congress must ensure that adequate funding is provided to the
CWA and SDWA State Revolving Funds (SRF) to assist states in addressing
water infrastructure needs and complying with federal water quality and
drinking water requirements. Western Governors also urge Congress
provide greater flexibility and fewer restrictions on state SRF
management.
I request that you include these documents in the permanent record
of the hearing, as they articulate Western Governors' policy positions
and recommendations on this important issue.
Thank you for your consideration of this request. Please contact me
if you have any questions or require further information.
Sincerely,
Jack Waldorf,
Executive Director, Western Governors' Association.

Attachments (2)
__________

Attachment 1
Western Governors' Association
Policy Resolution 2021-10
Water Quality in the West
A. BACKGROUND
1. Clean water is essential to strong economies and quality of
life. In most of the West, water is a scarce resource that must be
managed with sensitivity to social, environmental, and economic values
and needs. Because of their unique understanding of these needs, states
are in the best position to manage and protect their water resources.

2. Through the Clean Water Act (CWA), Congress has codified its
policy ``to recognize, preserve, and protect the primary
responsibilities and rights of states to prevent, reduce, and eliminate
pollution, to plan the development and use (including restoration,
preservation, and enhancement) of land and water resources, and to
consult with the [EPA] Administrator in the exercise of his authority
under [the CWA].''

3. The CWA further expresses Congress's policy that ``the
authority of each state to allocate quantities of water within its
jurisdiction shall not be superseded, abrogated, or otherwise impaired
by this chapter . . . Federal agencies shall co-operate with state and
local agencies, including authorized tribes, to develop comprehensive
solutions to prevent, reduce, and eliminate pollution in concert with
programs for managing water resources.''

4. States and the Environmental Protection Agency (EPA) work
together as co-regulators in the administration and implementation of
the CWA and the Safe Drinking Water Act (SDWA). Congress has delegated
to states, by statute, the authority to obtain approval to implement
certain federal program responsibilities. When a state has been
approved to implement a program and the state is meeting minimum
program requirements, the role of federal agencies should be limited to
funding, technical assistance, and research support. States should be
free to develop, implement, and enforce statutory requirements using an
approach that makes sense in their specific jurisdiction, subject to
the minimum requirements of the federal acts.

5. The CWA was last reauthorized in 1987; attempts to reauthorize
the Act since then have failed. Current federal regulations, guidance,
and programs pertaining to the CWA do not always recognize the specific
conditions and needs of most of the West, where water is scarce and
even wastewater becomes a valuable resource to both humans and the
environment. The West includes a variety of waters; small ephemeral
washes, large perennial rivers, effluent-dependent streams, and wild
and scenic rivers. In addition to natural rivers, streams and lakes,
there are numerous man-made reservoirs, waterways and water conveyance
structures. States need more flexibility to determine how to best
manage these varying resources.
B. GOVERNORS' POLICY STATEMENT
Clean Water Act (CWA)

1. State Authority and Implementation of CWA: States have
jurisdiction over water resource allocation decisions and are
responsible for how to balance state water resource needs within CWA
objectives. New regulations, rulemaking, and guidance should recognize
this state authority.

a) CWA Jurisdiction: Western Governors urge EPA and the U.S.
Army Corps of Engineers to engage the states as sovereigns and co-
regulators in the development of any rule, regulation, policy, or
guidance addressing the definition of ``waters of the United States''
as that term applies to the jurisdictional scope of the CWA.
Specifically, federal agencies should engage with states--through
Governors or their designees--with early, meaningful, substantive, and
ongoing consultation that adequately supports state authority. Such
consultation should begin in the initial stages of development before
irreversible momentum precludes effective state participation.

b) Total Maximum Daily Loads (TMDLs)/Adaptive Management: States
should have the flexibility to adopt water quality standards and set
total maximum daily loads (TMDLs) that are tailored to the specific
characteristics of western water bodies, including variances for unique
state and local conditions.

c) Anti-degradation: CWA Section 303 gives states the primary
responsibility to establish water quality standards (WQS) subject to
EPA oversight. Given the states' primary role in establishing WQS, EPA
should directly involve the states in the rulemaking process for any
proposed changes to its existing regulations. Before imposing new
antidegradation policies or implementation requirements, EPA should
document the need for new requirements and strive to ensure that new
requirements do not interfere with sound existing practices.

d) Groundwater: States have primary authority over the
protection of groundwater and exclusive authority over the management
and allocation of groundwater resources within their borders. The
regulatory reach of the CWA does not extend to the management and
protection of groundwater resources unless the activity in question is
the functional equivalent of a direct discharge from a point source. In
addressing pollution to groundwater resources, the federal government
must recognize and respect state authority, work in collaboration with
states, and operate within the designated scope of federal statutory
authorities. EPA should engage with states with early, meaningful,
substantive, and ongoing consultation on any regulatory processes
focused on groundwater resources or the development and application of
the meaning of ``functional equivalent.''

2. Permitting: Actions taken by EPA in its CWA permitting
processes should not impinge upon state authority over water management
or the states' responsibility to implement CWA provisions.

a) State Water Quality Certification: Section 401 of the CWA
requires applicants for a federal license to secure state certification
that potential discharges from their activities will not violate state
water quality standards. Section 401 embodies cooperative federalism.
States' mandatory conditioning authority should be retained in the CWA.

b) General Permits: Reauthorization of the CWA must reconcile
the continuing administrative need for general permits with their site-
specific permitting requirements under the CWA. EPA should promulgate
rules and guidance that better support the use of general permits where
it is more effective to permit groups of dischargers rather than
individual dischargers.

c) Water Transfers Rule: Western Governors support EPA's current
Water Transfers Rule, which exempts water transfers between waters of
the United States from the CWA National Pollutant Discharge Elimination
System (NPDES) permitting requirements when such transfers do not
involve the addition of any pollutants. States possess adequate
authority to address the water quality issues associated with such
transfers. Western Governors believe that transporting water through
constructed conveyances to supply beneficial uses should not trigger
duplicative NPDES permit requirements.

d) Pesticides: Western Governors generally support the primary
role of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA)
in regulating agriculture and public health related pesticide
applications to waters of the U.S. and will seek state-based solutions
that complement rather than duplicate FIFRA in improving, where
possible, environmental resources.

3. Nonpoint Source Pollution: Nonpoint source pollution requires
state watershed-oriented water quality management plans; federal
agencies should collaborate with states to carry out the objectives of
these plans. The CWA should not supersede other ongoing federal, state,
and local nonpoint source programs. Federal water policies must
recognize that state programs enhanced by federal efforts could provide
a firm foundation for a national nonpoint source policy that maintains
the non-regulatory and voluntary nature of the program. In general, the
use of point source solutions to control nonpoint source pollution is
also ill-advised.

a) Forest Roads: Stormwater runoff from forest roads has been
managed as a nonpoint source of pollution under EPA regulation and
state law since enactment of the CWA. Western Governors support
solutions that are consistent with the long-established treatment of
forest roads as nonpoint sources, provided that forest roads are
treated equally across ownership within each state.

b) Nutrient Pollution: Nitrogen and phosphorus (nutrient)
pollution is a significant cause of water quality impairment across the
nation, and continued cooperation between states and EPA is needed.
This impairment is a serious concern across western states and
additional resources to make investments in wastewater treatment
infrastructure are needed as part of a strategy to address it.

States should be allowed sufficient flexibility to utilize their
own incentives and authorities to establish standards and control
strategies to address nutrient pollution, rather than being forced to
abide by one-size-fits-all federal numeric criteria. Successful tools
currently in use by states include best management practices, nutrient
trading, controlling other water quality parameters, and other
innovative approaches.

4. CWA Reauthorization: Western Governors support reauthorization
of the CWA, provided that it recognizes the unique hydrology and legal
framework in western states. Further, any CWA reauthorization should
include a new statement of purpose to encourage the reuse of treated
wastewater to reduce water pollution and efficiently manage water
resources.

5. Good Samaritan Legislation: Congress should enact a program to
protect volunteering remediating parties who conduct authorized
remediation of abandoned hardrock mines from becoming legally
responsible under the CWA and/or the Comprehensive Environmental
Response, Compensation, and Liability Act for any continuing discharges
after completion of a remediation project, provided that the
remediating party--or ``Good Samaritan''--does not otherwise have
liability for that abandoned mine or inactive mine site.

6. Stormwater Pollution: In the West, stormwater discharges to
ephemeral streams in arid regions pose substantially different
environmental risks than do the same discharges to perennial surface
waters. Western Governors emphasize the importance of state expertise
in water management, including management of ephemeral streams. The
federal government must recognize and respect state authority and work
in collaboration with state agencies to support tailored approaches
that reflect the unique management needs of ephemeral streams.

7. State-Tribal Coordination: Western Governors endorse
government-to-government cooperation among the states, tribal nations,
and EPA in support of effective and consistent CWA implementation.
While retaining the ability of the Governors to take a leadership role
in coordination with the tribal nations, EPA should promote effective
consultation, coordination, and dispute resolution among the
governments, with emphasis on lands where tribal nations have
treatment-as-state status under Section 518 of the CWA.

Safe Drinking Water Act (SDWA)

8. Federal Assistance in Meeting SDWA Standards: Western Governors
believe that the SDWA and its standards for drinking water contaminants
have been instrumental in ensuring safe drinking water supplies for the
nation. It is essential that the federal government, through EPA,
provide adequate support to the states and water systems to meet
federal requirements. Assistance is particularly needed for small and
rural systems, which often lack the resources needed to comply with
federal treatment standards.

9. Drinking Water Standards: Contaminants such as arsenic,
chromium, perchlorate, and fluoride often occur naturally in the West.
Western Governors support EPA technical assistance and research to
improve both the efficiency and affordability of treatment technologies
for these contaminants. In any drinking water standards that the EPA
may revise or propose for these and other contaminants, including
disinfection byproducts, EPA should consider the disproportionate
effect that such standards may have on western states and give special
consideration to feasible technology based on the resources and needs
of smaller water systems.

10. Risk Assessments: Analysis of the costs of treatment for
drinking water contaminants should carefully determine the total costs
of capital improvements, operation, and maintenance when determining
feasible technology that can be applied by small systems. These costs
should be balanced against the anticipated human health benefits before
implementing or revising drinking water standards.

11. Emerging Contaminants/Pharmaceuticals: The possible health and
environmental effects of emerging contaminants, including per- and
polyfluoroalkyl substances (PFAS) and cyanotoxins produced by harmful
algal blooms, and pharmaceuticals are of concern to Western Governors.
Although some states have existing authorities to address possible
risks associated with emerging contaminants and pharmaceuticals, there
is a need for continued investment in scientific research regarding
human health effects of these contaminants.

Compliance with Federal Water Quality and Drinking Water Requirements

12. State Revolving Funds: Western Governors support EPA's Clean
Water State Revolving Fund (SRF) and Drinking Water SRF as important
tools that help states and local communities address related water
infrastructure needs and comply with federal water quality and drinking
water requirements. Western Governors also urge Congress and the
Administration to ensure that the SRF Programs are adequately funded
and provide greater flexibility and fewer restrictions on state SRF
management.

13. Restoring and Maintaining Lakes and Healthy Watersheds:
Historically, the Section 314 Clean Lakes Program and the Section 319
Nonpoint Source Management Program provided states with critical tools
to restore and maintain water quality in lakes and watersheds. Western
Governors urge the Administration and Congress to support these
programs. Such support should not come at the expense of other federal
watershed protection programs.

14. EPA Support and Technical Assistance: The federal government,
through EPA, should provide states and local entities with adequate
support and technical assistance to help them comply with federal water
quality and drinking water requirements. EPA should also collaborate
with and allow states to identify and establish priority areas,
timelines, and focus on programs that provide the largest public health
and environmental benefits.

15. EPA Grant Funding for Primary Service--Rural Water Programs:
Some rural communities still lack basic water and sanitary services
needed to assure safe, secure sources of water for drinking and other
domestic needs. Adequate federal support, including but not limited to
the Rural Utilities Service programs of the U.S. Department of
Agriculture and SRFs through EPA, are necessary to supplement state
resources.

Water Quality Monitoring and Data Collection

16. Water Data Needs: Western water management is highly dependent
upon the availability of data regarding both the quality and quantity
of surface and ground waters. Western Governors urge the federal
government to support and develop programs that can be utilized by
states for water resource management and protection and to provide
assistance to states in developing innovative monitoring and assessment
methods, including making use of biological assessments, sensors and
remote sensing, as well as demonstrating the value to the states of the
national probabilistic aquatic resource surveys.
C. GOVERNORS' MANAGEMENT DIRECTIVE
1. The Governors direct WGA staff to work with Congressional
committees of jurisdiction, the Executive Branch, and other entities,
where appropriate, to achieve the objectives of this resolution.

2. Furthermore, the Governors direct WGA staff to consult with the
Staff Advisory Council regarding its efforts to realize the objectives
of this resolution and to keep the Governors apprised of its progress
in this regard.

This resolution will expire in June 2024. Western Governors enact new
policy resolutions and amend existing resolutions on a semiannual
basis. Please consult http://www.westgov.org/resolutions for the most
current copy of a resolution and a list of all current WGA policy
resolutions.

Attachment 2
Western Governors' Association
Policy Resolution 2021-08
Water Resource Management in the West
A. BACKGROUND
1. Water is a crucial resource for communities, industries,
habitats, farms, and western states. Clean, reliable water supplies are
essential to maintain and improve quality of life. The scarce nature of
water in much of the West makes it particularly important to our
states.

2. States are the primary authority for allocating, administering,
protecting, and developing water resources, and they are primarily
responsible for water supply planning within their boundaries. States
have the ultimate say in the management of their water resources and
are best suited to speak to the unique nature of western water law and
hydrology.

3. Many communities in the West anticipate challenges in meeting
future water demands. Supplies are nearly fully allocated in many
basins across the West, and increased demand from population growth,
economic development, and intensifying extreme weather and fire events
places added stress on those limited water resources. Sustainability of
our natural resources, specifically water, is imperative to the
foundations upon which the West was developed. Growth and development
can only continue upon our recognition of continued state stewardship
of our unique resources and corresponding responsibilities.

4. Strong state, regional and national economies require reliable
deliveries of good-quality water, which in turn depend on adequate
infrastructure for water and wastewater. Investments in water
infrastructure also provide jobs and a foundation for long-term
economic growth in communities throughout the West. Repairs to aging
infrastructure are costly and often subject to postponement.

5. Western Governors recognize the essential role of partnership
with federal agencies in western water management and hope to continue
the tradition of collaboration between the states and federal agencies.

6. Tribal nations and western states also share common water
resource management challenges. The Western Governors Association and
Western States Water Council have had a long and productive partnership
with tribal nations, working to resolve water rights claims.
B. GOVERNORS' POLICY STATEMENT
1. State Primacy in Water Management: As the preeminent authority
on water management within their boundaries, states have the right to
develop, use, control and distribute the surface water and groundwater
resources, subject to international treaties and interstate agreements
and judicial decrees.

a. Federal Recognition of State Authority: The federal
government has long recognized the right to use water as determined
under the laws of the various states; Western Governors value their
partnerships with federal agencies as they operate under this
established legal framework.
While the Western Governors acknowledge the important role
of federal laws such as the Clean Water Act (CWA), the Endangered
Species Act (ESA), and the Safe Drinking Water Act (SDWA), nothing in
any act of Congress or Executive Branch regulatory action should be
construed as affecting, usurping, or intending to affect or usurp
states' primacy over the allocation and administration of their water
resources.
Authorization of federal water resources development
legislation, proposed federal surplus water rulemakings, and/or storage
reallocation studies should recognize natural flows and defer to the
states' legal right to allocate, develop, use, control, and distribute
such waters, including but not limited to state storage and use
requirements.

b. Managing State Waters for Environmental Purposes: States and
federal agencies should coordinate efforts to avoid, to the extent
possible, the listing of water-dependent species under the ESA. When
ESA listings cannot be avoided, parties should promote the use of
existing state tools, such as state conservation plans and in-stream
flow protections, to conserve and recover species.

2. Infrastructure Needs: Aging infrastructure for existing water
and wastewater facilities and the need for additional water projects
cannot be ignored. Water delivery and wastewater infrastructure
investments are essential to our nation's continued economic prosperity
and environmental protection, and they assist states in meeting
federally-mandated standards under the CWA, SDWA, and other federal
statutes. Western Governors support efforts to make the most of
existing infrastructure while seeking creative solutions to add more
infrastructure with limited resources.

a. Federal Support for Infrastructure Investment: Congress
should provide adequate support for the CWA and SDWA State Revolving
Funds. Further, Congress should support restoration and repair of aging
water infrastructure, commit to aiding efforts to address the recurring
drought conditions across the West, and fully utilize the receipts
accruing to the Reclamation Fund for their intended purpose in the
continuing conservation, development and wise use of western resources
to meet western water-related needs, including the construction of
Congressionally-authorized Bureau of Reclamation rural water projects
and facilities that are part of Congressionally-authorized Indian water
rights settlements.
Congress should authorize federal water resources
development legislation on a regular schedule and appropriate
sufficient funding so that all projects and studies authorized in such
legislation can be completed in a timely manner.
The Bureau of Reclamation's WaterSMART Program provides
valuable support to states, tribal nations, water and irrigation
districts, and local entities to invest in water conservation projects
and modern water delivery infrastructure.
The U.S. Army Corps of Engineers' Planning Assistance to
the States (PAS or ``Section 22'') Program also funds critical work in
western states as a program focused on comprehensive water resources
planning.
Congress also should recognize the potential of greater
private investment in water infrastructure, utilizing, where
appropriate, such tools as loan guarantees, revolving funds,
infrastructure banks and water trust funds.
Capital budgeting and asset management principles should
be used to determine funding priorities based on long-term
sustainability and not annual incremental spending choices. It should
be accompanied by dedicated sources of funding with appropriate
financing, cost-sharing, pricing and cost recovery policies.

b. Additional Investment Tools: Federal and state policymakers
should also consider additional tools to promote investment in water
infrastructure and reduce financing costs, including: public-private
partnerships, bond insurance, risk pooling, and credit enhancements.
Congress should remove the state volume caps for private
activity bonds used for water and wastewater projects, provide
guaranteed tax-exempt status for bonds issued by state or local
agencies to finance water infrastructure, provide loan guarantees, and
otherwise support and encourage the use of other financing tools.

c. Hydropower: In consultation with affected states, Congress
and the Administration should optimize federally-owned or licensed
hydropower resources by increasing turbine efficiency and investing in
conduit hydropower in irrigation canals and wastewater systems
consistent with existing water diversions. Congress and the
Administration should also authorize and implement federally-owned or
licensed hydropower projects and programs through efficient permitting
processes that: utilize new technology to improve renewable electric
generation capacity, promote economic development, are consistent with
the needs of native fisheries and riverine processes, and safeguard and
solidify states' permitting and certification authority and indigenous
peoples' rights.

d. Infrastructure Planning and Permitting: Federal
infrastructure planning and permitting guidelines, rules and
regulations should be coordinated with state processes, and
sufficiently flexible to: (1) allow for timely decision-making in the
design, financing and construction of needed infrastructure; (2)
account for regional differences; (3) balance economic and
environmental considerations; and (4) minimize the cost of compliance.

3. Western States Require Innovative and Integrated Water
Management: Western Governors believe effective solutions to water
resource challenges require an integrated approach among states and
with federal, tribal and local partners. Federal investments should
assist states in implementing state water plans designed to provide
water for municipal, rural, agricultural, industrial and habitat needs,
and should provide financial and technical support for development of
watershed and river basin water management plans when requested by
states.
Integrated water management planning should also account for
flood control, water quality protection, and regional water supply
systems. Water resource planning must preserve state authority to
manage water through policies which recognize state law and financial,
environmental and social values of water to citizens of western states
today and in the future.

a. Water Transfers: Western Governors recognize the potential
benefits of market-based water transfers, meaning voluntary sales or
leases of water rights. The Governors support water transfers that
avoid or mitigate damages to agricultural economies and communities
without causing injury to other water rights, water quality, and the
environment.

b. Energy Development: Western Governors recognize that energy
development and electricity generation may create new opportunities for
limited water resources. Western Governors recommend increased
coordination across the energy and water management communities and
support ongoing work to assess interactions between energy generation
and water availability in the Western Interconnection.

c. Conservation and Efficiency: Because of diminished water
resources and declining and inconsistent snowpack, Western Governors
encourage adoption of strategies to sustain water resources and extend
existing water supplies further through water conservation, water reuse
and recycling, desalination and reclamation of brackish waters, and
reductions in per capita water use. The Governors encourage the use of
and research into promising domestic, municipal, industrial, produced,
and agricultural water conservation strategies and technologies.

d. Local Watershed Planning: Western Governors encourage federal
agencies and Congress to provide resources such as technical support to
states and local watershed groups. States may empower these watershed
groups to address local water issues associated with water quality,
growth and land management to complement state water needs.

e. Forest Health and Soil Stewardship: Better land management
practices for forests and farmland may help improve water availability
and soil moisture retention. Wildfires can cause sediment runoff in
water systems, leading to problems for reservoir management and water
quality. Governors support policies and practices that encourage
healthy and resilient forests and soils in order to make the most of
existing water supplies.

f. Intergovernmental Collaboration and Conflict Resolution:
Western Governors support the settlement of interstate water disputes,
Indian and Native Hawaiian water rights claims, and other federal water
needs and claims, the settlement of which are in the best interest of
western states.

g. State-Federal Coordination: Western Governors recognize the
important role of federal agencies in water resource management in the
western states. Governors appreciate the efforts of federal agencies to
coordinate water-related activities, particularly through the Western
States Water Council, and support the continuation of these key state-
federal partnerships.

4. Western States Need Reliable Water Resource Information: Basic
information on the status, trends and projections of water resource
availability is essential to sound water management.

a. Basic Water Data: Western Governors support federal programs
dedicated to the improvement of data on snowpack, streamflow, soil
moisture, and forecasting, including the Natural Resources Conservation
Service's Snow Survey and Water Supply Forecasting Program; the
National Oceanic and Atmospheric Administration's weather and
hydrology-related data collection, monitoring, and drought information
programs, including the National Integrated Drought Information System;
the U.S. Geological Survey's Groundwater and Streamflow Information
Program; and the National Aeronautics and Space Administration's
National Land Imaging (Landsat) Program. Western Governors further
support federal efforts to coordinate water data gathering and
information programs across multiple agencies.

b. Extreme Weather Events Planning: Western Governors recognize
the significant effects posed by extreme weather events and variability
in water supplies. Western Governors urge Congress and the
Administration to work closely with states and other resource managers
to improve predictive and adaptive capabilities for extreme weather
variability and related impacts. We specifically urge the federal
government to place a priority on improving the sub-seasonal and
seasonal precipitation forecasting capabilities that could support
water management decision-making.

c. Water Data Exchange: The Western Governors' Association and
the Western States Water Council have worked together to create the
Water Data Exchange, an online portal that will enable states to share
their water data with each other, federal agencies, and the public via
a common platform. The Governors encourage the use of state water data
in planning for both the public and private sectors.
C. GOVERNORS' MANAGEMENT DIRECTIVE
1. The Governors direct WGA staff to work with Congressional
committees of jurisdiction, the Executive Branch, and other entities,
where appropriate, to achieve the objectives of this resolution.

Mr. Rouzer. I now recognize the ranking member of the full
committee, Mr. Larsen, for 5 minutes for an opening statement.

OPENING STATEMENT OF HON. RICK LARSEN OF WASHINGTON, RANKING
MEMBER, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

Mr. Larsen of Washington. Thank you, Chair Rouzer and
Ranking Member Napolitano, for holding this hearing on clean
water infrastructure financing, and thank you to the witnesses
for joining us today.
I have to admit, I am a little disappointed, walking down
the hallways here and seeing the big lineup outside, and then
realizing they weren't here for the clean water infrastructure
hearing. I do think it is an important issue, perhaps not as
important as other things, but I am glad we are having this
hearing and the folks at home can participate otherwise.
In June, I joined EPA's Assistant Administrator for Water,
Radhika Fox, in my district in Ferndale, Washington, to
announce over $278 million in funding for water infrastructure
for American Indian Tribes and Alaska Native Villages. These
historic investments were the largest ever made by the EPA to
Tribes through regular appropriations funding.
Clean water is a human right that historically underserved
communities, including Tribal communities, have lacked access
to for far too long. Investments like these made possible by
the Bipartisan Infrastructure Law will improve lives, level the
playing field for communities, and create jobs.
In the BIL, on a bipartisan basis, Congress affirmed its
commitment to water infrastructure with significant
investments: $14.4 billion in Federal dollars for upgrading
wastewater systems, preventing pollution, and supporting
restoration programs in places like Puget Sound and the Salish
Sea. These investments are critical, providing a lifeline to
communities across the country struggling to maintain water
quality. Members who voted for the BIL voted for clean water.
House Democrats have consistently supported investments in
water infrastructure to protect public health and the work that
EPA and other agencies do in support of this clean water
mission. In contrast, the House Republican Interior
Appropriations bill proposes a two-thirds reduction in funding
for the Clean Water SRF, a cut of over $1 billion.
The Clean Water State Revolving Fund, or the SRF, has been
the linchpin of efforts to protect and improve water quality
for over three decades. I suspect that's why, despite their
differences, all the witnesses appearing before us today agree
on the importance of Clean Water SRF funding.
In just the last 2 years, in the district I represent, the
Clean Water SRF has been used to upgrade aging sewer and water
equipment, improve nutrient removal capabilities, and protect
local groundwater supply. And I have toured, far too many to
count, wastewater facilities in my district--it's the thing you
get to do when you are a Member of Congress--and I can assure
you there is plenty more work that needs to be done.
From a $1.4 million SRF loan in Whatcom County to a
$200,000 grant to the Lummi Tribe for engineering reviews, the
Clean Water SRF is making a difference. Established in 1987, it
has been critical for countless communities striving to upgrade
and maintain their water and wastewater infrastructure. It has
provided low-interest loans and grants to States and
municipalities, allowing them to undertake vital projects that
protect public health, preserve our natural resources, and
stimulate economic growth.
Unfortunately, we have at times neglected to invest in our
infrastructure. Aging pipes, polluted waterways, and
increasingly frequent extreme weather events have stretched our
water systems and wastewater systems to a breaking point. The
most recent EPA report on wastewater infrastructure needs
estimated we would need $271 billion over the next 20 years to
continue to meet Federal standards for water quality. These
challenges are not limited to one region; they affect
communities from coast to coast and across the political
spectrum.
Under the Bipartisan Infrastructure Law, $11.7 billion in
supplemental appropriations for the Clean Water SRF will be
provided through 2026, on top of what should be continued in
regular appropriations. These investments are a downpayment on
transforming our Nation's wastewater infrastructure, and their
significance cannot be overstated. This funding will enable
communities large and small to embark on a new era of water
infrastructure projects that will modernize our systems,
improve water quality, and ensure the safety and health of
citizens.
The impact of this investment goes beyond the immediate
benefits of improved water quality. It will create jobs. It
will stimulate local economies. It will support American
business.
The Bipartisan Infrastructure Law recognizes that investing
in our water infrastructure is an investment in our future.
So, I thank you again, Mr. Chair and Ranking Member, for
holding this hearing, and I look forward to the testimony.
[Mr. Larsen of Washington's prepared statement follows:]

Prepared Statement of Hon. Rick Larsen, a Representative in Congress
from the State of Washington, and Ranking Member, Committee on
Transportation and Infrastructure
Thank you, Chairman Rouzer and Ranking Member Napolitano, for
holding this hearing on clean water infrastructure financing, and thank
you to the witnesses for joining us today.
In June, I joined Environmental Protection Agency's (EPA) Assistant
Administrator for Water Radhika Fox in my district in Bellingham,
Washington, to announce over $278 million in funding for water
infrastructure for American Indian Tribes and Alaska Native Villages.
These historic investments were the largest ever made by EPA to
Tribes through regular appropriations funding.
Clean water is a human right that historically underserved
communities, including Tribal communities, have lacked access to for
far too long.
Investments like these made possible by the Bipartisan
Infrastructure Law (BIL) will improve lives, level the playing field,
and create jobs.
In the BIL, on a bipartisan basis, Congress affirmed its commitment
to water infrastructure with significant investments--$14.4 billion in
federal dollars for upgrading wastewater systems, preventing pollution
and supporting restoration programs in places like the Puget Sound and
the Salish Sea.
These investments are critical, providing a lifeline to communities
across the country struggling to maintain water quality. Members who
voted for the BIL voted for clean water.
House Democrats consistently support investments in water
infrastructure to protect public health and the work EPA and other
agencies do in support of this clean water mission.
In contrast, the House Republican Interior Appropriations bill
proposes a two-thirds reduction in funding for the Clean Water SRF--a
cut of over $1 billion.
The Clean Water State Revolving Fund, or Clean Water SRF, has been
the linchpin of efforts to protect and improve water quality for over
three decades.
I suspect that's why, despite their differences, all the witnesses
appearing before us today agree on the importance of Clean Water SRF
funding. In just the last two years, in the district I represent, the
Clean Water SRF has been used to upgrade aging sewer and water
equipment, improve nutrient removal capabilities, and protect local
groundwater supply.
I have toured, far too many to count, wastewater facilities in my
district--the things you get to do when you're a Member of Congress--
and I can assure you that there is plenty more work that needs to be
done.
From a $1.4 million SRF loan in Whatcom County to a $200,000 grant
to the Lummi Tribe for engineering reviews, the Clean Water SRF is
making a difference.
The Clean Water SRF, established in 1987, has been critical for
countless communities striving to upgrade and maintain their water and
wastewater infrastructure.
It has provided low-interest loans and grants to states and
municipalities, allowing them to undertake vital projects that protect
public health, preserve our natural resources, and stimulate economic
growth.
Unfortunately, we have at times neglected to invest in our water
infrastructure. Aging pipes, polluted waterways, and increasingly
frequent extreme weather events have stretched our water and wastewater
systems to the breaking point.
The most recent EPA report on wastewater infrastructure needs
estimated we would need $271 billion over the next twenty years to
continue to meet federal standards for water quality.
These challenges are not limited to one region; they affect
communities from coast to coast and across the political spectrum.
Under the Bipartisan Infrastructure Law, $11.7 billion in
supplemental appropriations for the Clean Water SRF will be provided
through 2026, on top of what should be continued regular
appropriations.
These investments are a down payment on transforming our nation's
wastewater infrastructure and their significance cannot be overstated.
This funding will enable communities large and small to embark on a
new era of water infrastructure projects that will modernize our
systems, improve water quality, and ensure the safety and health of our
citizens.
The impact of this investment goes beyond the immediate benefits of
improved water quality. It will also create jobs, stimulate local
economies, and support American businesses.
The Bipartisan Infrastructure Law recognizes that investing in our
water infrastructure is an investment in our future.
Thanks again to the Chairman and Ranking Member for holding this
hearing, I look forward to the testimony.

Mr. Rouzer. I thank the gentleman. I would now like to
welcome our witnesses. And again, thank you for being here
today.
First, we have Ms. Lori Johnson, assistant chief, Financial
Assistance Division, at the Oklahoma Water Resources Board,
here on behalf of the Council of Infrastructure Financing
Authorities.
We have Mr. Todd Swingle, CEO and executive director of
Toho Water Authority in Kissimmee, Florida, on behalf of the
National Association of Clean Water Agencies.
And we have Mr. Jim Proctor, senior VP of legal and
external affairs at McWane, Incorporated, on behalf of the U.S.
Chamber of Commerce.
And last, but certainly not least, Ms. Rebecca Hammer, the
deputy director for Federal water policy at the Natural
Resources Defense Council.
So, briefly, let me explain the lighting system, of which I
am sure you are already fully aware. Green means go; yellow
means you've got about 30 seconds left; and red means wrap it
up as quick as you can.
I ask unanimous consent that the witnesses' full statements
be included in the record.
Without objection, so ordered.
As your written testimony has been made part of the record,
the subcommittee asks that you limit your oral remarks to
roughly 5 minutes.
With that, Ms. Johnson, you are recognized for 5 minutes.

TESTIMONY OF LORI JOHNSON, ASSISTANT CHIEF, FINANCIAL
ASSISTANCE DIVISION, OKLAHOMA WATER RESOURCES BOARD, ON BEHALF
OF THE COUNCIL OF INFRASTRUCTURE FINANCING AUTHORITIES; TODD P.
SWINGLE, P.E., CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR,
TOHO WATER AUTHORITY, ON BEHALF OF THE NATIONAL ASSOCIATION OF
CLEAN WATER AGENCIES; JAMES M. PROCTOR II, SENIOR VICE
PRESIDENT, LEGAL AND EXTERNAL AFFAIRS, McWANE, INC., ON BEHALF
OF THE U.S. CHAMBER OF COMMERCE; AND REBECCA HAMMER, DEPUTY
DIRECTOR OF FEDERAL WATER POLICY, NATURAL RESOURCES DEFENSE
COUNCIL

TESTIMONY OF LORI JOHNSON, ASSISTANT CHIEF, FINANCIAL
ASSISTANCE DIVISION, OKLAHOMA WATER RESOURCES BOARD, ON BEHALF
OF THE COUNCIL OF INFRASTRUCTURE FINANCING AUTHORITIES

Ms. Johnson. Thank you, Chairman Rouzer, Ranking Members
Napolitano and Larsen, and members of the committee, for
allowing me to testify before you today. My name is Lori
Johnson, and I am the assistant chief of the Financial
Assistance Division of the Oklahoma Water Resources Board. I am
testifying today on behalf of the Council of Infrastructure
Financing Authorities, also known as CIFA, which is a national
organization that represents the Clean Water SRFs around the
country.
Clean Water SRFs around the country wanted me to leave you
with three take-home messages today.
First, we love loans. I know I am probably one of the few
witnesses to testify to that, but the SRFs love subsidized
loans because they are a model of fiscal responsibility.
Federal funding is used over and over in perpetuity to meet the
never-ending need to repair, rehabilitate, and replace aging
infrastructure. For example, Federal appropriations from the
1990s are being used today to finance billions of dollars in
infrastructure projects. Without loan repayments, these water
projects would likely cost more or wouldn't be built at all.
We also love SRF subsidized loans because they foster
fiscal responsibility. To qualify for a loan, these communities
have to have their finances in order.
And the SRFs love subsidized loans because they save money,
real money. Subsidized loans can save as much as two-thirds in
interest payments, which is essentially a grant equivalent,
financing costs which would otherwise be passed on to
ratepayers through utility bills.
Second, the cumulative impact of Federal mandates is
increasing the cost of water infrastructure and threatening the
affordability of SRF subsidized loans. Since 2009, a growing
number of Federal mandates has eroded the savings from SRF
subsidized loans. Today, Federal mandates impact many aspects
of water infrastructure projects, including planning and
design, procurement of professional services, wages for
construction workers, and the eligibility of construction
materials, all of which impact the cost of the project.
While well-intentioned public policy, these Federal
mandates may not be achieving the goals originally envisioned
by Congress and, more importantly, the goals of the Clean Water
Act, which is to maintain, restore, and protect the quality of
the Nation's waters. The Clean Water SRFs urge the committee to
fully evaluate the impact of Federal mandates on SRF subsidized
loans, specifically whether these mandates are increasing
protection for public health and the environment, which are the
goals of the SRF programs.
Third, the Clean Water SRFs urge the committee to establish
a separate authorization for congressional earmarks. For the
last 2 years, the Appropriations Committee has diverted more
than $1.3 billion in annual Federal funding from the Clean
Water SRFs to pay for congressional earmarks. While
supplemental funding in the Infrastructure Investment and Jobs
Act is mitigating the immediate damage of those cuts, shifting
Federal funding from loans to grants will have lasting effects
on the Nation's ability to finance water infrastructure in the
future, not to mention undermining the transformation potential
of the Infrastructure Investment and Jobs Act.
Additionally, the Clean Water SRFs face a fiscal cliff when
this short-term funding ends in just 3 years. Establishing a
separate authorization would provide greater transparency to
annual Federal funding for the Clean Water SRFs, which is
essential for managing the SRF project pipeline.
Thank you again for the opportunity to testify on behalf of
the Clean Water SRFs. I look forward to answering any questions
you may have.
[Ms. Johnson's prepared statement follows:]

Prepared Statement of Lori Johnson, Assistant Chief, Financial
Assistance Division, Oklahoma Water Resources Board, on behalf of the
Council of Infrastructure Financing Authorities
Chairman Rouzer, Ranking Member Napolitano and members of the
Committee, thank you for the opportunity to testify before you today on
behalf of the 51 Clean Water State Revolving Funds (SRFs), the nation's
premier programs for financing water infrastructure that protects
public health and the environment.
My name is Lori Johnson and I am Assistant Chief of the Financial
Assistance Division for the Oklahoma Water Resources Board, which
manages the Clean Water SRF in the Sooner State. I also serve as
Secretary for the Board of Directors of the Council of Infrastructure
Financing Authorities (CIFA), which is a national not-for-profit
organization that educates and advocates on behalf of the Clean Water
and Drinking Water SRFs.
The Clean Water SRFs are a national model for federal investment in
infrastructure.
More than three decades ago, Congress established the Clean Water
SRFs as federally subsidized loan programs to provide affordable
financing for municipal water infrastructure that protects public
health and the environment. Since then, the Clean Water SRFs have used
$52 billion in federal capitalization grants to generate $163 billion
in financial assistance for more than 46,000 clean water infrastructure
projects in communities across the nation.
Because of Congress' foresight and fiscal responsibility, the Clean
Water SRFs are generating a recurring, renewable source of revenue to
meet the never-ending need to repair, rehabilitate and replace aging
water infrastructure. As of 2022, loan repayments permanently revolving
in the Clean Water SRFs topped $63 billion, exceeding cumulative
federal funding and financing projects that may never have been built
had Congress created a grant program instead.
The Clean Water SRF subsidized loans save money to keep water bills
affordable.
In 2022, the average interest rate on an SRF subsidized loan was
1.2% \1\, while the average interest rate on a municipal bond was 3.8%
\2\--more than triple the average SRF interest rate. A utility that
finances a $10 million project through an SRF will save more than $3.15
million, or 71%, in interest payments, compared to the interest on a
municipal bond. Reducing the cost of water infrastructure alleviates
pressure on utilities to raise rates for wastewater, stormwater and
recycled water services.
---------------------------------------------------------------------------
\1\ According to the U.S. Environmental Protection Agency, the
average Clean Water SRF interest rate was 1.2% in 2022.
\2\ According to the Securities Industry and Financial Markets
Association, the average interest rate for a 20-year high grade average
was 3.8% in 2022.
---------------------------------------------------------------------------
The Clean Water SRFs are effective and responsive to communities.
The Clean Water SRFs are effective because federal law allows
states to customize their program within a broad federal framework.
This flexibility, which is a hallmark of the SRF state-federal
partnership, allows the SRFs to be responsive to the diverse and
evolving needs of communities across the nation--from small communities
such as Tabor City, North Carolina, with a population of 4,000, to
urban centers, such as Los Angeles, California, with a population of
nearly four million.
The Clean Water SRFs are efficient, low-cost infrastructure funding
programs.
The amount of annual federal funding that can be used to administer
the Clean Water SRFs is capped at just 4%. To maximize the amount of
federal funding for water infrastructure projects, some SRFs use state
funding or other revenue sources to pay staff and administrative
expenses. To improve the impact and outcomes of federal funding, some
SRFs use the administrative allotment to fund technical assistance,
apprenticeship programs, or other statewide initiatives.
The Clean Water SRFs efficiently deliver billions in financial
assistance every year.
Just last year, the Clean Water SRFs delivered $9.6 billion in
state and federal funding for more than 1,600 water infrastructure
projects. More than half of the water infrastructure projects were in
small and rural communities with a population of less than 3,500. SRFs
are often the only funding option for small and rural communities,
which lack the revenue to qualify or afford financing on the municipal
bond market.
While well-intended, federal mandates on SRF subsidized loans are
increasing the cost of water infrastructure; these costs are then
passed onto households and small businesses in higher water bills.
Perhaps more importantly, these federal mandates may not be achieving
the goals that Congress intended.
Since 2009, Congress has added multiple federal mandates on SRF
subsidized loans, including state funded loans. Today, federal mandates
impact nearly every aspect of a water infrastructure project, including
planning and design, procurement of professional services, wages for
construction workers, and eligibility of building materials.

------------------------------------------------------------------------
Federally State
Mandate Enacted Financed Financed
Projects Projects
------------------------------------------------------------------------
Davis Bacon..................... 2009 X X
American Iron and Steel......... 2014 X X
Water and Energy Certification.. 2014 X X
Fiscal Sustainability Plan...... 2014 X X
Engineering Procurement......... 2014 X
Build America, Buy America...... 2021 X
------------------------------------------------------------------------

Davis Bacon Prevailing Wage Laws
Since 2009, annual appropriations bills and subsequently the Clean
Water Act have required all SRF projects, including those financed by
state funding, to comply with Davis Bacon, which requires construction
workers to be paid the federal prevailing wage rate for the county in
which the project is built.
For most projects, paying the federal prevailing wages isn't an
issue, especially in today's tight labor market which often requires
contractors to pay more than the federal prevailing wage to attract and
retain skilled workers. The problem is the prescriptive, burdensome and
duplicative federal procedures and paperwork required to demonstrate
compliance with the federal mandate.
CIFA offers these suggestions to streamline the compliance
procedures for Davis Bacon while maintaining the mandate for federal
prevailing wages:
Modernize the contract threshold and index the threshold
to inflation: Davis Bacon applies to water infrastructure projects that
cost more than $2,000, a threshold that hasn't been updated since the
law was enacted in 1931. For context, the average cost of a water
infrastructure project in a small community (fewer than 10,000 people)
was $1.8 million in 2022.
Allow the use of the wages published by the Department of
Labor's Bureau of Labor Statistics in lieu of conformance: Wage
determinations are not always available for every job in every county,
especially in rural counties. Allowing the use of a trusted,
alternative source for wages would eliminate the need for conformance,
which can be a lengthy process for getting a wage determination.
Allow compliance with state prevailing wage laws to
satisfy compliance with Davis Bacon: 26 states have state prevailing
wage laws and must comply with both federal and state compliance
procedures, which is duplicative and increases the cost of compliance
but may not benefit workers.
Allow Governors to develop compliance procedures that
better align with state law: The Clean Water Act allows Governors to
develop compliance procedures,\3\ but EPA has not approved
implementation of this provision.
---------------------------------------------------------------------------
\3\ Clean Water Act 33 U.S.C. Sec. 1382 (b) (6) treatment works
eligible under this chapter which will be constructed in whole or in
part with assistance made available by a State water pollution control
revolving fund authorized under this subchapter, or section 1285(m) of
this title, or both, will meet the requirements of, or otherwise be
treated (as determined by the Governor of the State) under sections
1371(c)(1) and 1372 of this title in the same manner as treatment works
constructed with assistance under subchapter II of this chapter;
---------------------------------------------------------------------------
Allow state prevailing wages to be used in lieu of
federal prevailing wages: According to a 2019 audit by the Inspector
General of the Department of Labor,\4\ the agency adopts state
prevailing wages for transportation projects but not for water and
other projects. Extending this accepted practice to water
infrastructure projects would eliminate duplication and reduce the cost
of administration for water infrastructure projects.
---------------------------------------------------------------------------
\4\ Better Strategies are Needed to Improve the Timeliness and
Accuracy of Davis-Bacon Prevailing Wage Rates, U.S. Department of Labor
Inspector General, Report Number 04-19-001-15-001, March 29, 2019.
---------------------------------------------------------------------------
American Iron and Steel and Build America, Buy America Act
Two federal mandates for domestic procurement apply to water
infrastructure projects financed with SRF subsidized loans.
Since 2014 annual appropriations bills and subsequently
the Clean Water Act have required all SRF projects, including those
financed with state funding, to use iron and steel made in the U.S.,
known as America Iron and Steel (AIS) requirements.
Since 2021, the Build America, Buy America Act (BABAA)
has required all federally funded water infrastructure projects,
including federally funded SRF projects,\5\ to use iron, steel,
construction materials and manufactured products made in the U.S.
---------------------------------------------------------------------------
\5\ Federally funded SRF projects include ``equivalency projects.''

Clear guidance, consistent implementation and equal application of
the law are needed to successfully implement BABAA and ensure critical
water infrastructure projects remain on track, on time and on budget.
With the second anniversary of BABAA quickly approaching, it is
imperative that EPA provide detailed guidance for demonstrating
compliance with BABAA, especially for manufactured products.
While EPA has issued a waiver for projects that initiated design
planning by the effective date of the law, many SRFs no longer have
projects that qualify for this waiver. In the absence of clear guidance
for demonstrating compliance and in an abundance of caution, some SRFs
are urging borrowers to apply for a project-specific waiver to avoid
potential non-compliance. Until there is clarity on compliance, EPA and
the Made In America Office (MIAO) could quickly become overwhelmed with
requests for project-specific waivers.
Additionally, EPA has proposed sunsetting the current BABAA waiver
for SRF projects on September 30, 2024. SRF projects that are eligible
for the current waiver, particularly large, multi-year projects that
are already under construction, are likely to abandon SRF financing
rather than redesign their projects. This unintended consequence will
likely increase the cost of water infrastructure, which will be passed
onto households and small businesses in higher water bills.
CIFA offers these suggestions for strengthening implementation of
and compliance with BABAA:
A Level Playing Field: The same types of water
infrastructure projects are treated differently depending on the agency
and program that provides federal funding. As a result, some programs
may have more, or less, stringent requirements than other programs,
creating inequity among recipients of federal funding. Requiring the
same rules for the same types of water infrastructure projects will
ensure a level playing field.
+ The EPA, U.S. Department of Agriculture Rural Development,
U.S. Department of Interior Reclamation Grants and U.S. Department of
Housing and Development Community Development Block Grants have
different rules for the same types of water projects, which creates
confusion across the water sector, especially for projects that are co-
funded.
+ EPA has different rules for different programs that fund the
same types of water projects within the agency. Several of these
programs are delegated to the states and managed by the SRFs, creating
even more confusion about rules of compliance.
Standards for Demonstrating Compliance: The SRFs need
clear and consistent guidance for documenting compliance. For example,
will manufacturers have to provide documentation for every step in the
manufacturing process (supplier, fabricator, manufacturer, processor)
and for every subcomponent in a manufactured product (water
purification technologies can have hundreds of subcomponents)?
Conflicting Standards: The SRFs believe AIS and BABAA
have conflicting guidance for precast concrete products and
subcomponents of iron and steel products. Providing explicit direction,
such ``compliance with AIS satisfies compliance with BABAA,'' would
ensure consistency for programs with the AIS mandate.
Codify the Current BABAA Waiver for SRFs: The current
BABAA waiver for SRF projects exempts projects that initiated design
planning before the effective date of the law. Waiving BABAA
requirements for projects that were designed or under construction
before the law took effect ensures communities can maintain affordable
SRF financing for their water infrastructure projects without going
back to the drawing board.
Waiver Decisions: The turnaround time for a decision on
waivers is unknown. A typical AIS waiver takes about eight weeks.
Because the waiver must be approved by both EPA and MIAO, it's
anticipated that the turnaround time for a BABAA waiver could take as
long as 16 weeks. Requiring a specific turnaround time for waiver
decisions is essential for planning purposes and to avoid liquidated
damages for contractors that miss deadlines due to BABAA waiver
determinations.
Water and Energy Efficiency Certification
Since 2014, the Water Resources Reform and Development Act (WRRDA)
has required all SRF borrowers to conduct a cost and effectiveness
analysis and certify that their project ``maximizes the potential for
efficient water use, reuse, recapture, and conservation, and energy
conservation.''
Conducting a cost and effective analysis increases the cost of
water infrastructure projects but may not provide significant, or even
measurable, environmental benefits for most SRF projects, especially
those in small and rural communities with populations fewer than 10,000
people which comprise two-thirds of SRF loans.
For example,
Conservation or reducing consumption is an important goal
for drinking water projects. However, conservation is challenging for
projects that lack a consumption component, such as collecting and
treating wastewater and stormwater.
The analysis is irrelevant, but still required, for
projects specifically designed to reuse or recycle water or to reduce
energy consumption, which are the goals of the federal mandate.
The analysis is unnecessary, but still required, for
projects that don't use any energy, such as gravitational sewer
collection systems, lagoon treatment systems or pipe replacement
projects.

SRFs understand the importance of pursuing water and energy
efficiency, but allowing SRFs to identify the projects that will
benefit from this cost and effectiveness analysis is a more efficient
and effective approach for achieving Congress' goals.
Fiscal Sustainability Plan
Since 2014, WRRDA has required select SRF borrowers to develop a
fiscal sustainability plan for the water infrastructure project being
financed. The law requires the plan to include an inventory of critical
assets, an evaluation of the condition and performance of assets, and a
funding plan to maintain, repair and replace the assets. These select
SRF borrowers must also certify implementation of water and energy
efficiency as part of the plan.
Complying with this federal mandate increases the cost of water
infrastructure but may not further the goal of fiscal sustainability.
The federal mandate only applies to projects that receive SRF loans,
not to projects that are financed by bonds issued by municipalities and
purchased by the SRFs. Additionally, while the fiscal sustainability
plan is intended to be a ``living document'' to improve operations and
management, many small and rural communities with few professional
staff don't have the capacity to continually review, revise and
implement these plans.
The Clean Water SRFs understand the importance of fiscal
responsibility and financial sustainability and conduct a thorough
review of an applicant's financial health as part of their underwriting
process before a subsidized loan is awarded. SRFs also provide grant
funding for rate studies and asset management plans to foster
accountability for the federal and state investment in clean water
infrastructure.
Architectural and Engineering Procurement
Since 2014, WRRDA has required borrowers of federally funded SRF
projects to use the federal procurement process to select architects
and engineers. Established by the Brooks Act, the federal procurement
process requires selection based solely on qualifications and prohibits
the cost of services from being considered as a factor.
Approximately two-thirds of states have a ``mini'' Brooks Act which
aligns to the federal process and allows for seamless procurement.
However, in other states, the federal procurement process conflicts
with the state procurement process, making it difficult or impossible
to implement.
Even in states where the state and federal procurement process are
aligned, this federal mandate poses an obstacle. Many borrowers engage
an engineering firm before deciding to pursue SRF financing. Small
communities may be prohibited from using an engineer that serves on
long-term contract as staff augmentation.
In some states, this requirement deters communities from pursuing
SRF financing for planning and design. In other states, the SRFs issue
separate loan agreements--one for engineering funded with state money
and one for construction funded with federal money--which creates more
process, paperwork and expense without more protection for public
health and the environment.
The Clean Water SRFs are concerned about the transformation of these
state-run, subsidized loan programs into a top-down, one-size-fits-all
federal grant program.
In addition to federal mandates on borrowers, federal mandates on
the Clean Water SRFs are eroding the lending power of the SRFs.
Diverting annual federal funding from the SRFs to provide grants for
congressional earmarks and requiring the SRFs to use annual federal
funding as grants or principal forgiveness, instead of subsidized
loans, reduces leveraging to meet current demand and permanently
eliminates a reliable source of recurring revenue to fund water
infrastructure projects in the future.
Transforming the SRF subsided loan program into a grant program has
permanent adverse consequences. Every federal dollar diverted from SRF
subsidized loans to congressional earmarks, grants or principal
forgiveness permanently eliminates a recurring source of funding to
build water infrastructure projects in the future. Unlike grants that
fund one project, SRF subsidized loans generate loan repayments that
can be used, and reused, in perpetuity to fund multiple water
infrastructure projects, alleviating the cost of construction and
compliance on future generations.
Additional Subsidy (Grants and Principal Forgiveness)
Federal mandates requiring the SRFs to use annual federal funding
as grants or principal forgiveness, instead of subsidized loans, have
doubled in the last two years. Increased federal mandates for
additional subsidy have coincided with the return of earmarks, which
means the majority of annual federal funding is being provided as
grants or grant-equivalents, instead of subsidized loans.
Since 2009, appropriations bills have mandated that the SRFs
provide a percentage of annual federal funding as grants or principal
forgiveness, known as additional subsidy. Since 2021, the Clean Water
Act has mandated the Clean Water SRFs provide 10% of their annual
federal funding as grants or principal forgiveness. In 2023, the total
federal mandate for grants or principal forgiveness is 20% of annual
federal funding.
While additional subsidy is an important tool, SRFs believe it
should only be used when absolutely necessary to help communities that
couldn't otherwise afford to build clean water infrastructure. A one-
size-fits-all federal mandate for additional also ignores the
variability of need from state to state. For example, states with
generous state grant programs for water infrastructure could use 100%
of annual federal funding for SRF subsidized loans.
Additionally, the Infrastructure Investment and Jobs Act (IIJA)
mandates that 49% of supplemental funding be provided as grants or
principal forgiveness, permanently eliminating a significant source of
recurring funding for future water infrastructure.
Recommendation: End federal mandates for grants or principal
forgiveness.
Ending the federal mandate wouldn't end the SRFs' ability to
provide grants or principal forgiveness. The Clean Water Act allows up
to 30% of annual federal funding to be used as grants or principal
forgiveness for communities that meet affordability criteria. Even
without the federal mandates, the SRFs would continue to help
communities that couldn't otherwise afford to pay for clean water
infrastructure. Moreover, many Clean Water SRFs would prefer to use
state grant programs, which have more flexibility and fewer
requirements, to help communities with significant affordability
challenges.
State Match
The Clean Water Act requires states to match 20% of the annual
capitalization grant. When the match requirement was established, 100%
of federal funding had to be used for subsidized loans; the law didn't
allow federal funding to be used for grants or principal forgiveness.
Some SRFs, like the Oklahoma Clean Water SRF, issue revenue bonds
to provide state match. However, federal mandates for grants or
principal forgiveness jeopardize the ability of the SRFs to generate
state match because only interest payments on subsidized loans can be
used to repay the bond. Because federal mandates for grants or
principal forgiveness reduce funding for subsidized loans, some SRFs
may need to raise interest rates to generate adequate state match.
Recommendation: End state match for federally mandated grants and
principal forgiveness.
States should only be required to match federal funding for SRF
subsidized loans, not for federally mandated grants or principal
forgiveness.
Congressional Earmarks
Over the last two years, Congress has diverted $1.3 billion or 40%
of annual federal funding from the Clean Water SRFs to create a
gigantic new EPA grant program for congressional earmarks. The proposed
2024 appropriations bills from the U.S. House of Representatives and
U.S. Senate would divert another $815 million from Clean Water SRF
subsidized loans to one-time grants--$470 million for House earmarks
and $345 million for Senate earmarks. Additionally, the House
appropriations bill would provide less than $65 million to split among
50 states and Puerto Rico for Clean Water SRF projects, a 96% cut from
annual federal funding of $1.6 billion just three years ago.
Congressional earmarks have also undermined the transformational
potential of the IIJA. While the IIJA has provided $4.1 billion in
supplemental federal funding for the Clean Water SRFs over the last two
years, nearly one-third, or $1.3 billion, was needed to backfill cuts
to annual federal funding caused by using the SRF capitalization grant
to pay for congressional earmarks. If this practice continues, the SRFs
face a program-ending funding cliff when short-term IIJA funding ends
in three years.
Recommendation: Establish a separate authorization for congressional
earmarks.
Creating a separate authorization for congressional projects would
restore transparency and fiscal integrity to the Clean Water SRFs.
Minor tweaks to the IIJA will improve operations and outcomes.
IIJA Funding for Emerging Contaminants
The IIJA provided $1 billion over five years to the Clean Water
SRFs specifically to remediate the potential harm of emerging
contaminants on public health and the environment. However, appropriate
restrictions in the base program are limiting the most effective use of
this short-term dedicated funding.
Under current law, routine water quality testing and
monitoring is ineligible for SRF funding. While CIFA supports this
prohibition for the base program, testing and monitoring are critical
activities for developing a comprehensive plan to detect, prevent and
mitigate emerging contaminants.
Under current law, watershed studies, which include water
quality testing and monitoring, are eligible for SRF funding. However,
EPA limits eligibility to studies in watersheds with known
contamination; studies to detect contamination in a watershed are
ineligible.
Under current law, capital improvement projects for
pretreatment at industrial facilities are eligible for SRF funding if
discharges are treated beyond pretreatment standards. A utility or
government agency must serve as a conduit for the SRF loan, also known
as a pass-through loan. However, this option has not been widely used
to date.
Recommendation: Expand the eligible uses of funding for emerging
contaminants
Explicitly allow SRFs to use IIJA emerging contaminants funding for
sampling, testing and monitoring to detect sources of contamination,
watershed studies to detect and map the pathways of contamination, and
capital improvement projects at industrial facilities to pretreat
wastewater to reduce and prevent contamination.
Technical Assistance
As part of the IIJA, the Drinking Water and Wastewater
Infrastructure Act amended the Clean Water Act to allow the Clean Water
SRFs to use up to 2% of annual federal funding to provide technical
assistance to small and rural communities. While similar to a long-term
provision in the Safe Drinking Water Act, the Drinking Water SRFs have
more flexibility to fund qualified providers,\6\ including private
sector professionals, while the Clean Water SRFs can only fund
government and not-for-profit providers \7\.
---------------------------------------------------------------------------
\6\ Safe Drinking Water Act, U.S.C. 42 Sec. 300j-12 (g)(2)(C) ``An
additional 2 percent of the funds annually allotted to each State under
this section may be used by the State to provide technical assistance
to public water systems serving 10,000 or fewer persons in the State.''
\7\ Clean Water Act, U.S.C. 33 Sec. 1383 (k) ``A State may use an
additional 2 percent of the funds annually awarded to each State under
this subchapter for nonprofit organizations (as defined in section
1254(w) of this title) or State, regional, interstate, or municipal
entities to provide technical assistance to rural, small, and tribal
publicly owned treatment works (within the meaning of section
1254(b)(8)(B) of this title) in the State.''
---------------------------------------------------------------------------
CIFA defines technical assistance is the targeted delivery of
professional services to help communities comply with water quality
standards, build physical, financial and operational resiliency, and
develop and implement an economically and technically sound plan for
capital improvement projects. Unfortunately, government and non-profit
providers have limited capacity to provide needed professional
services, such as engineering, environmental assessment, and
accounting, to accomplish these goals for small and rural communities.
Recommendation: Expand eligible providers for technical assistance
Align the language in the Clean Water Act to the language in the
Drinking Water Act to allow the SRFs to use up to 2% of annual federal
funding for technical assistance provided by any qualified provider,
including government, not-for-profit organizations or private sector
entities.
Thank you for your partnership.
On behalf of the Clean Water SRFs, thank you for your partnership.
With your continued support, the Clean Water SRFs will continue to
finance water infrastructure projects that improve water quality and
provide safe and affordable wastewater services for hundreds of
millions of Americans.

Mr. Rouzer. Mr. Swingle.

TESTIMONY OF TODD P. SWINGLE, P.E., CHIEF EXECUTIVE OFFICER AND
EXECUTIVE DIRECTOR, TOHO WATER AUTHORITY, ON BEHALF OF THE
NATIONAL ASSOCIATION OF CLEAN WATER AGENCIES

Mr. Swingle. Good morning, Chairman Rouzer, Ranking Members
Larsen and Napolitano, and to all the members of the
subcommittee. Thank you for the opportunity to testify on
behalf of the National Association of Clean Water Agencies,
NACWA, the Nation's leading organization of publicly owned
clean water utilities. It is an honor to be here today.
My name is Todd Swingle, and I am the CEO and executive
director of Toho Water Authority in Kissimmee. Toho provides
water, wastewater, and reuse water services to approximately
430,000 residents and visitors of central Florida. I am also a
board member of NACWA.
Communities across the country face a growing array of
complex water challenges, including increasingly stringent
compliance obligations. As we strive to deliver on the public
health and environmental protection outcomes that our
communities expect and deserve, Clean Water State Revolving
Funds, integrated water resource planning, and the remaining
topics of my testimony are critical.
Since 1987, SRFs have served as the primary Federal
financing tool helping local communities more affordably meet
Clean Water Act compliance obligations. The Clean Water SRF's
low-interest rates are particularly helpful in times such as
these, when interest rates for other borrowing options are
elevated.
In Florida and across the country, SRF investments have
helped both urban and rural utilities to treat wastewater to
higher standards, improve energy efficiency, capture and reuse
biogas, enhance beneficial reuse, reduce nitrogen and
phosphorus loading, and address wet weather and resiliency
challenges.
Building on the Clean Water SRFs, the 5-year, $11.7 billion
Infrastructure Investment and Jobs Act serves as a historic
investment in clean water infrastructure. However, this was
intended to be a one-time infusion of capital to the Clean
Water SRFs in addition to the ongoing annual appropriations.
Likewise, the return of community project funding provides an
alternative option for communities to address the rapidly
widening funding gap.
Growing a portfolio of accessible funding approaches is
critical to delivering on our promise of public health and a
clean water environment. With all due respect to the committee,
the current Clean Water SRF investments proposed in the House's
fiscal year 2024 appropriations bill are not adequate to
achieve these goals. It is imperative that Congress fully
appropriate the amounts authorized under the IIJA, and fund
earmarks from a source other than the Clean Water SRF.
At the top of the list of challenges for utilities is PFAS.
Utilities embrace a role that we play in removing PFAS under
Clean Water Act science-based regulatory processes, but it is
the actual polluters who alone must be held liable. While the
IIJA allocated $1 billion in mandatory Federal funding for
emerging contaminants, the Clean Water SRF is designed for
capital infrastructure investments.
Today, the need for many utilities includes PFAS
monitoring, assessments, and pretreatment efforts. It is
important that Congress provide a legislative fix to allow for
flexible access to this funding for these needs.
Another important provision of the IIJA is the requirement
that 49 percent of the mandatory dollars be allocated as a
subsidy, essentially forgivable loans or grants for
disadvantaged communities. To date, we have heard that numerous
States have updated their definition of disadvantaged
communities, consistent with the EPA's recommendation to
consider multiple factors like unemployment, how water and
sewer rates compare to the lowest quintile income, and ensuring
funds reach urban areas of poverty, as well as rural and small
communities. We recommend that Congress continue to monitor the
success of these subsidies and remain open to providing further
direction.
In addition to funding, the regulatory approaches are
instrumental in delivering effective, affordable solutions.
Furthering acceptance of integrated planning is another key way
that regulators can help communities stretch limited
infrastructure dollars. NACWA greatly appreciates the
bipartisan leadership of this committee in getting integrated
planning codified to the Clean Water Act in 2018. We look
forward to working with Congress and EPA to help State
regulators further enhance this critical tool.
Finally, it is imperative that Congress enact sensible,
targeted reforms to the Clean Water Act to provide regulatory
certainty needed for utilities to effectively and affordably
plan and invest in long-term capital projects to meet
compliance obligations. Without regulatory certainty,
investments such as those made through the Clean Water SRF will
not have the full positive impact intended.
In closing, growing the water infrastructure funding
portfolio, maintaining and growing the foundational Clean Water
SRFs, and addressing the other challenges, including integrated
planning and regulatory certainty, are critical as utilities
strive to continue providing essential clean water services to
our communities. NACWA appreciates the ongoing engagement by
the committee on these critical issues.
Thank you again for the opportunity to testify before you
today, and I would be happy to answer any questions from the
committee.
[Mr. Swingle's prepared statement follows:]

Prepared Statement of Todd P. Swingle, P.E., Chief Executive Officer
and Executive Director, Toho Water Authority, on behalf of the National
Association of Clean Water Agencies
Introduction
Good morning, Chairmen Graves and Rouzer, Ranking Members Larsen
and Napolitano, and to all the members of the Subcommittee. Thank you
for the opportunity to testify on behalf of the National Association of
Clean Water Agencies, or NACWA. It is an honor to be here with you.
My name is Todd Swingle, and I am the CEO and Executive Director of
the Toho Water Authority (Toho) in Kissimmee, Florida. Toho operates 17
water treatment facilities and nine wastewater treatment facilities,
treating and distributing over 50 million gallons of potable water and
reclaiming approximately 35 million gallons of wastewater each day for
the 430,000 residents and visitors that we serve throughout the region.
I am also a Board member of NACWA, the nation's leading
organization of publicly owned clean water utilities. Toho's 500 plus
employees, like the workforces of NACWA member utilities from Coast-to-
Coast, are on the front lines each day providing essential services.
Our utilities are anchor institutions within our communities and for
over 50 years since the enactment of the Clean Water Act (CWA), NACWA's
members have made incredible progress in cleaning up the Nation's vital
water resources, supporting economic prosperity in our communities, and
improving the quality of life of all Americans in line with the CWA's
``cooperative federalism'' framework.
Communities across the country face a growing array of complex
water quality challenges including increasingly stringent CWA
compliance obligations. As we strive to deliver on the public health
and environmental protection outcomes that our communities expect and
deserve, the Clean Water State Revolving Fund (CWSRF), integrated water
resource planning flexibility and the remaining topics of my testimony
are critical throughout the Nation.
Clean Water State Revolving Fund (CWSRF) and Infrastructure Investment
and Jobs Act (IIJA)
Since the establishment of the CWSRF under the 1987 CWA amendments,
Congress has appropriated over $50 billion in federal investment
collectively to the state CWSRFs, who in turn have provided over $160
billion to local communities. These low-interest loans, and in some
cases grants through additional subsidization provisions, provided
under the CWSRF have remained the primary federal clean water financing
tool that public clean water utilities have used to help their local
communities more affordably meet their CWA compliance obligations and
upgrade their aging treatment plants and critical infrastructure. The
low interest rates offered by the CWSRF can be particularly helpful,
especially during times such as these when interest rates for other
borrowing options are elevated.
In Florida and across the country, SRF investments have helped fund
projects to treat wastewater to higher standards, improve energy
efficiency and lower emissions, capture and reuse biogas, reduce
nitrogen and phosphorus loading, and address wet weather and resiliency
challenges, among many other types of projects.
The historic water infrastructure investments further provided
under the Infrastructure Investment and Jobs Act (IIJA), also referred
to as the Bipartisan Infrastructure Law (BIL), are the most critical
investments for clean water since the Construction Grants Program
helped build the network of wastewater treatment agencies after passage
of the CWA in 1972. The IIJA or BIL's $11.7 billion over five years to
the CWSRF in direct mandatory appropriations will be instrumental in
helping many communities upgrade their clean water infrastructure and
treatment systems.
However, these five-year investments were intended to be a one-time
infusion into the CWSRF in addition to the ongoing annual
appropriations. It is imperative that Congress continue providing the
highest level of annual CWSRF appropriations and, as provided under the
authorizing portions of the IIJA, fully maximize these historic
investments and ensure the long-term viability of this bipartisan
program.
Likewise, the return of Community Project Funding, also known as
earmarks, provide an alternative option for communities to address
critical infrastructure projects. The Nation's growing water
infrastructure needs are already resulting in a rapidly widening
funding gap. Growing a portfolio of accessible funding approaches is
critical to communities and the Nation in delivering on our promise of
public health and a clean water environment.
With all due respect to the Committee, the current investments in
the CWSRF proposed in the House's FY2024 budget are not adequate to
achieve these goals. It is imperative that Congress fully appropriate
the CWSRF at the amounts authorized under the IIJA and fund earmarks
from a source other than the CWSRF.
CWSRF investments are vital for helping both urban and rural
communities more affordably meet 21st century clean water challenges to
maintain and update their clean water infrastructure; expand treatment
systems and technologies to address new pollutant standards and to
remove per- and polyfluoroalkyl substances (PFAS); advance reuse
initiatives; manage population growth, industrial and agricultural
expansion and land development pressures; and help utilities improve
resilience to storms and other natural impacts, among others.
PFAS and Emerging Contaminants
At the top of this list of challenges, public clean water utilities
are extremely concerned about the potential health and environmental
risks associated with exposure to PFAS. PFAS remediation must be paid
for by the polluters--those who manufactured and profited from this
ubiquitous chemical. The innocent water or wastewater treatment utility
ratepayers who had no part in creating or profiting from PFAS must not
in any way be left holding the bill to deal with PFAS. There is a role
for utilities to appropriately play in the removal of PFAS under the
CWA based on a science-based regulatory processes, but it is the actual
polluters who alone must be held liable.
An important provision in the IIJA was the specific allocation of
an additional $1 billion in mandatory federal funding through the CWSRF
for utilities to address Emerging Contaminants, including PFAS.
However, with these dollars flowing through the SRF, a program designed
for the purpose of capital infrastructure investments, clean water
utilities have mostly been unable to utilize these resources for the
types of efforts that they are currently undertaking to address PFAS--
such as monitoring, assessments, and pretreatment efforts with
industrial users they serve. Essentially, the types of proactive
efforts not commonly supported by the CWSRF because they are not deemed
to be ``infrastructure'' projects.
Unfortunately, there are currently no available technologies that
effectively and affordably destroy PFAS in clean water or biosolids at
the scale managed by public clean water utilities. Additionally, state
SRFs have the authority to request full transfer of CWSRF funds
designated for Emerging Contaminants to be applied to accounts for
drinking water, which several states have already opted to do.
It is important that Congress provide a legislative fix to allow
clean water utilities more flexible access to this IIJA funding to do
critical PFAS monitoring and assessment work so local communities can
understand the key sources of PFAS loading to their water systems,
identify opportunities for controls, and prioritize opportunities for
investment to reduce PFAS.
Affordability
Another important provision in the IIJA, and one that NACWA helped
champion, is a requirement that 49 percent of the mandatory dollars
under the legislation flowing to the SRF programs must be allocated by
the states as additional subsidization--meaning that these funds are
essentially forgivable loans (or grant equivalents). This provision is
particularly important for getting federal help to target areas facing
serious need or financial hardship and to disadvantaged communities
that might not have the capacity for loan financing.
Because the SRFs are run through the states--each of which has its
own rules for applying additional subsidization--EPA has provided
recommendations for how states should consider targeting such funds to
reach potentially eligible areas and communities. Strengths of this
guidance include encouraging states to look beyond singular metrics of
disadvantage and consider various metrics like unemployment, comparison
of water and sewer rates compared to lowest quintile income, and
ensuring funds reach urban areas of poverty as well as rural and small
communities.
While EPA has laid out this guidance, the task of implementation
falls to the states. Given the significant influx of funding, NACWA
strongly believes that states must be innovative in how they apply this
additional subsidy, and we stand ready to further serve as a resource
in how states update their definitions. To date, we have heard that
numerous states have updated their definitions of disadvantaged
communities to be more inclusive. We recommend that Congress continue
to monitor how additional subsidies are applied and remain open to
providing further direction to the programs as implementation advances.
This will help ensure that the IIJA resources help those urban and
rural communities more affordably and directly access much-needed
infrastructure funding.
Congress should also provide oversight for how EPA addresses
affordability issues. Earlier this year, EPA finalized its revised
Financial Capability Assessment (FCA) Guidance, which is used by EPA
and the states to determine how much a community can afford to pay to
meet increasing compliance requirements under the CWA.
For several years prior, NACWA, in partnership with the other major
water sector organizations, and key municipal groups, jointly worked
with EPA under both the Obama and Trump Administrations to advocate for
a new approach that specifically looked at the impacts that the cost of
compliance with expanding CWA mandates would have on low-income
households within an impacted community, as opposed to broader service
area metrics that often mask the actual impact on individual households
in the lower quartile of the service areas income bracket.
Unfortunately, the new FCA Guidance failed to fully embrace this
low-income approach, meaning that the true impacts on these rural and
urban households may not be fully considered and could leave them
paying a disproportionate amount of their income on water and sewer
bills.
This is a key opportunity for Congress to support true water
affordability by providing oversight of how EPA addresses affordability
issues and by ensuring its affordability guidance truly aims to help
actual low-income households in urban and rural areas.
Integrated Planning
Furthering the acceptance of Integrated Planning by state and
federal regulatory/permitting and enforcement agencies is another way
that regulators can help communities stretch limited infrastructure
investment dollars. Integrated Planning can help large and small
communities better manage costs and prioritize their growing list of
clean water investments and obligations more affordably over time to
best serve their ratepayers. NACWA greatly appreciates the bipartisan
leadership of this Committee in getting Integrated Planning codified
into the Clean Water Act in 2018. We look forward to further working
with Congress and EPA to help state regulators in particular enhance
this critical tool and incorporate Integrated Planning approaches into
permitting and enforcement, and help communities best develop their
Integrated Planning framework and work with their regulators on
approval.
Regulatory Certainty
Finally, it is imperative that sensible, targeted reforms to the
CWA are enacted to ensure that clean water utilities have the
regulatory certainty needed to effectively and affordably plan and
invest in long-term capital infrastructure projects and meet their
compliance obligations.
Without regulatory certainty, as well as improved transparency and
due process, greater scientific integrity, and protection for utilities
against the increasing number of unwarranted CWA citizen suits,
investments such as those made through the CWSRF will not have the full
positive impact intended to affordably provide local communities with
the highest levels of water quality improvement. NACWA has previously
testified before this Committee about these issues and looks forward to
working with the Committee on this important topic.
Conclusion
Growing the water infrastructure funding portfolio, including the
foundational CWSRF, and addressing the other challenges I have
mentioned are critical as utilities strive to continue providing
essential public clean water services to their communities. NACWA
appreciates the ongoing engagement by the Committee with the public
clean water sector on these critical issues. Thank you again for the
opportunity to testify before you today and I would be happy to answer
any questions the Committee may have.

Mr. Rouzer. Mr. Proctor.

TESTIMONY OF JAMES M. PROCTOR II, SENIOR VICE PRESIDENT, LEGAL
AND EXTERNAL AFFAIRS, McWANE, INC., ON BEHALF OF THE U.S.
CHAMBER OF COMMERCE

Mr. Proctor. Chairman Rouzer, Ranking Member Napolitano,
Ranking Member Larsen, members of the subcommittee, thank you
for the opportunity and the invitation to be here today to talk
about clean water infrastructure financing.
My name is Jim Proctor. I am with McWane, Incorporated. We
are a privately owned company that for over 175 years has
provided the basic building blocks of the country's water
infrastructure. We employ more than 6,000 team members across
the country in 14 States and 25 manufacturing facilities.
Over the past several years, Congress has passed monumental
legislation that includes substantial investments in water
infrastructure. However, several problems have emerged that
could jeopardize the ability of the States and the private
sector to realize the opportunities that Congress intended to
create.
One such obstacle is the lack of regulatory clarity in many
critical areas. For example, the authorization for the funds
for emerging contaminants expires in December 2027. However,
EPA has yet to issue effluent limitation guidelines for any
PFAS. Knowing the standards that utilities must meet is
critical to the design of waste treatment and other projects in
evaluating and selecting the appropriate technology. These
delays in announcing standards are putting utilities and State
agencies in a squeeze that could preclude the funding of
important projects.
Second, earmarks for specific projects demonstrate
responsiveness to constituent needs and offer an important tool
to Members of Congress to respond to those needs. But they
should be additive to the existing SRF allocations. More than
1,400 projects were earmarked for funding in the SRF
appropriations for 2022 and 2023, constituting the majority of
the funding for 2023. Although the funding must attach within 2
years, to date, fewer than 200 of those 1,400 projects for 2022
and 2023 have applied for approval, and fewer still have been
approved. Earmarks that aren't additive reduce the funding
available for other non-earmarked SRF projects with acute need,
reduce the funds available for program administration, and
create uncertainty in the planning process, all of which slows
the allocation of funding across all projects.
But in addition, delays in the allocation of this earmarked
funding also creates uncertainty in the private sector, which
discourages the capital investment needed to ensure that supply
chains are able to provide the critical products and equipment
to meet the needs of project owners. For example, our industry
saw a significant post-COVID surge in demand that created
production and delivery backlogs for a short period of time.
The infrastructure programs passed by Congress, though,
signaled an assurance of continued demand that prompted us to
significantly increase our capital expenditures and expand
capacity not only to eliminate those existing backlogs, but
also to position our plants to serve the needs created by the
infrastructure programs. However, the slow commencement of
projects and uncertainties about the programs have resulted in
a dramatic decrease in demand that has forced us to consider
reducing production expansion plans and associated employment.
Also, permitting delays have slowed the construction of
expansion projects, a situation that will be aggravated by the
possible adoption of EPA's new PM2.5 standards.
Because many other producers face the same situations, when
projects eventually do commence, the demand for essential
products with which to build those projects will hit the market
in a large, compressed surge that manufacturers could be ill-
positioned to meet, which could result in delays or
cancellations of projects and increased costs.
To avoid these problems, we ask the members of this
committee to consider extending some of the deadlines
applicable to the Bipartisan Infrastructure Law and IRA funding
to engage with EPA to accelerate the rollout of the authorized
funding to increase the availability of much-needed technical
assistance, and to ask your colleagues on the Appropriations
Committee to support full funding for the SRF in addition to
whatever earmarks they might deem appropriate.
Thank you very much for the opportunity to testify, and I
will be happy to answer any questions.
[Mr. Proctor's prepared statement follows:]

Prepared Statement of James M. Proctor II, Senior Vice President, Legal
and External Affairs, McWane, Inc., on behalf of the U.S. Chamber of
Commerce
Chairman Rouzer, Chairman Graves, Ranking Member Napolitano,
Ranking Member Larsen, and members of the subcommittee, thank you for
the invitation to testify today on Clean Water Infrastructure
financing.
During my career I have had the privilege to help promote policies
that will make our water infrastructure systems more resilient, secure,
and efficient, working not only in my capacity as senior vice president
for McWane, Inc., but also as a member of the executive committee of
the BuildStrong Coalition, the corporate advisory council of the Blue-
Green Alliance, the Water Infrastructure Leadership Group (the ``Ad Hoc
Group''), the U.S. Water Partnership, the Environmental Protection
Agency's National Drinking Water Advisory Council, and the role in
which I am here presenting today, chair of the U.S. Chamber of
Commerce's Business Task Force on Water Policy.
My company, McWane, is deeply involved in water infrastructure. For
almost 175 years McWane has proudly provided the building blocks for
our nation's water infrastructure, supplying the pipe, valves,
fittings, and related products that transport clean water to
communities and homes across the country and around the world. More
recently we have expanded our operations into the fields of
infrastructure technology and electric power distribution. We employ
more than 6,000 team members, who work in 25 manufacturing facilities
in fourteen states.
Over the past several years Congress has passed monumental
infrastructure legislation that includes substantial investments in
water infrastructure, including $11.7 billion for the Clean Water State
Revolving Funds over five years through the Bipartisan Infrastructure
Law. However, several problems have emerged that could jeopardize the
ability of the states and the private sector to realize the
opportunities that Congress intended to create. First, the BIL imposes
short deadlines that have been compressed even further by EPA's slow
roll out of guidance for the implementation of some of the governing
principles for the programs. The impact of these impending deadlines
has been and will be particularly acute with the funds allocated for
emerging contaminants. The authorization for these funds expires in
December 2027, with a possibility of an extension until 2029. However,
EPA has yet to recommend water quality criteria or issue effluent
limitations guidelines for any PFAS. Knowing the standards that
utilities must meet is critical to the design of waste treatment and
other projects and evaluating and selecting the appropriate technology.
Unless and until utilities know what to target, they cannot design the
projects and select the appropriate equipment. These delays in
announcing the standards coupled with the impending deadlines are
putting utilities and state agencies in a squeeze that could preclude
the funding of important projects.
Second, it is true that earmarks for specific projects can
demonstrate responsiveness to constituent needs and offer an important
tool to Members of Congress, but they should be additive to the
existing SRF allocations. More than 1,400 projects were earmarked for
funding in the latest SRF appropriation, constituting the majority of
the funding for 2023. Although the funding must attach within two
years, to date fewer than 200 of these 1,400 projects for 2022-23 have
applied for approval and fewer still have been approved. Earmarks (that
are not additive) reduce the funding available for other, non-earmarked
SRF projects with acute need, reduce the funds available for program
administration, and create uncertainty in the planning process, which
will slow the allocation of funding across all projects. But but even
to the extent they serve important needs of their own, the delays in
the allocation of this earmarked funding also creates uncertainty in
the private sector, which discourages the capital investment needed to
ensure that supply chains are able to provide critical products and
equipment to meet the needs of project owners.
For example, our industry saw a significant, post-COVID surge in
demand that created production and delivery backlogs. Although we knew
that situation was temporary, the passage of BIF, IRA, and the 2022-23
appropriations provided the assurance of continued demand necessary to
significantly increase our capital expenditures and expand capacity,
not only to eliminate those backlogs, but also to position our plants
to serve the needs created by the infrastructure programs. However, the
slow commencement of specific projects has resulted in a dramatic
decrease in demand that, together with the uncertainty about whether
projects will even receive funding before the deadlines, has compelled
us to rethink our expansion plans and reduce the number of production
shifts and associated employment. Moreover, even for those capital
projects that remain in play, permitting delays are a continuing
problem. Because many other producers face the same situations, when
projects eventually do commence, the demand for essential products with
which to build those projects will hit the market in a large but
compressed surge that manufacturers will be ill-positioned to meet,
which could result in delays or cancellations of projects and increased
costs.
Furthermore, the increased use of earmarks disrupts the states'
ability to prioritize projects based on need, because in some cases the
funds are directed to projects with low need at the expense of those in
disadvantaged areas. And since earmarked dollars are dispensed directly
by EPA, not the states, they are not paid back into the revolving fund,
and thus cannot be reloaned again for future projects.
To avoid these issues, we ask the members of this committee to
consider extending some of the deadlines applicable to the BIL and IRA
funding, to engage with EPA to accelerate the roll out of the
authorized funding, increase the availability of much needed technical
assistance, and to ask your colleagues in the appropriations process to
support full funding for the SRFs aside from whatever earmarks they
might deem appropriate. There is consensus on these issues across the
stakeholder community: The Chamber and a broad coalition of
stakeholders sent a letter to appropriators supporting full SRF funding
and funding for water provisions in the BIL, which were authorized but
not appropriated.\1\ The leaders of 45 state and territorial
environmental agencies also recently called on Congress to restore
funding for--and fully appropriate--the Clean Water and Drinking Water
State Revolving Funds.
---------------------------------------------------------------------------
\1\ https://www.uschamber.com/environment/coalition-letter-on-
water-infrastructure-program-funding
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I also would like to make several points about how to improve the
current state of clean water infrastructure financing.
First, meeting our clean water infrastructure needs requires a
partnership between the public and private sectors. Many smaller,
disadvantaged utilities are simply overwhelmed by the financial and
increasingly complex management challenges that they face. As a result,
many of them are regularly out of compliance with applicable water
quality standards but lack the expertise and resources to rectify the
problems. Although there are public and private utilities that could
help, they are often reluctant to do so because of fear of inheriting
the distressed entity's enforcement problems. In addition, private
utilities are currently ineligible for Clean Water SRF funding. As a
result, a private utility cannot assume ownership of a struggling
public utility unless any outstanding SRF loans are repaid immediately.
These problems create poison pills that effectively bar Good Samaritan-
private entities from helping protect the public when distressed
utilities cannot do so on their own. To eliminate these obstacles to
private sector assistance, Congress should: provide a ``safe harbor''
for the acquirer of a troubled system that proscribes enforcement for a
time period sufficient to bring it into compliance; expand Clean Water
SRF eligibility to include private entities; and extend an investment
tax credit to the acquirer of non-compliant systems with fewer than
10,000 service connections.
Second, meeting our clean water infrastructure needs also requires
regulatory consistency. At present, concern over PFAS has some EPA
regions getting ahead of the regulatory process. For example, some
wastewater utilities are being asked to monitor for dozens of PFAS,
even without a complete analysis of whether the specific PFAS presents
a public health risk before the promulgation of a water quality
standard.
The Chamber has long made permitting reform a top priority,
especially considering the massive infusion of funding from the BIL. If
we are to meet our ambitious climate and infrastructure goals as a
nation, projects must begin without delay. This does not mean that
environmental protections should not be part of the process but rather
reviews should be timebound with concrete milestones.
Third, meeting our clean water infrastructure needs requires
innovation. Communities around the country are facing daunting
investment challenges. There are many technological solutions that can
provide more efficient and less expensive ways to protect public health
and the environment. Many such technologies would benefit rural and
disadvantaged communities in particular, making access to clean water
more affordable. Not only should EPA encourage the use of these
innovations through targeted project funding and streamlined approvals,
but it should also provide financial assistance for their development.
Money invested in innovation will be recouped with cost savings.
Fourth, permitting delays remain a problem for both manufacturers
and utilities. Even in emergency situations environmental reviews of
clean water projects can drag on for six months or more, leaving
communities at risk in the interim. Similarly, obstacles and delays in
the permitting of capacity expansions, such as those that will result
from EPA's new PM 2.5 regulation, will diminish the ability of American
industry to produce the products essential to infrastructure projects
across the country.
Fifth, meeting our clean water infrastructure needs requires
technical assistance. Accessing the SRFs is sometimes a very complex
process that requires specialized expertise, which is often lacking in
the communities that could benefit most. That is why for drinking water
infrastructure the Chamber and its partners developed the Small and
Disadvantaged Community Water Funding Roadmap to identify the latest
public and private technical assistance resources that will help
communities access the water and resilience funding in the BIL. You may
have seen that our colleague George Hawkins, who is a leading thinker
in this area, received an EPA grant to reach the disadvantaged
communities. The Chamber also was a strong supporter of the recent FEMA
designations of 483 Community Disaster Resilience Zones in communities
nationwide that can help direct funding to the most vulnerable and the
most at risk.
Technical assistance funding for disadvantaged and rural
communities from the Infrastructure Law has been very slow. For
example, the Environmental Finance Centers, a major source of the new
technical assistance, were not online until November 2022. That means
we were already in the second year of the five-year BIL funding window
before technical assistance was provided to small communities to help
them plan projects and get on state Intended Use Plans.
Sixth, wastewater is often viewed as a source of pollution, but
should be promoted as a resource to provide sustainable nutrients and
energy. At a time when climate impacts are exacerbating water scarcity
in regions across our nation and the world, private sector innovation
and solutions are needed to more effectively reuse and recycle
wastewater for various applications--from flushing toilets to
irrigation and process water.
The Chamber last year launched the Industrial Water Reuse Champions
Awards to recognize companies that are leading in this effort and to
encourage their peers to join. The initial winners represented sectors
across the economy--Apache, Intel, and PepsiCo.
Finally, addressing the aging water workforce should be a top
priority for our nation. Congress should build on the current EPA
efforts and increase coordination with the U.S. Department of Labor and
other agencies in developing a workforce development program that will
help American workers get the skills and credentials needed to support
the operation, maintenance, and improvement of the water and wastewater
systems of tomorrow. Congress should enact policies that simplify the
award and interstate recognition (e.g., reciprocity and portability) of
water operator and engineering certifications.
Thank you again for the opportunity to testify. I would be happy to
answer any questions.

Mr. Rouzer. Ms. Hammer.

TESTIMONY OF REBECCA HAMMER, DEPUTY DIRECTOR OF FEDERAL WATER
POLICY, NATURAL RESOURCES DEFENSE COUNCIL

Ms. Hammer. Thank you, Chairman Rouzer, Ranking Members
Larsen and Napolitano, and members of the committee. I
appreciate the opportunity to testify today. My name is Becky
Hammer. I am the deputy director of Federal water policy for
the Natural Resources Defense Council.
NRDC is a nonprofit organization working to protect public
health and ensure a safe, sustainable environment for all
people. At NRDC, I advocate for policies to ensure that
everyone in this country has access to wastewater and
stormwater infrastructure that works.
No matter where they are located, these systems should
provide communities with clean waterways, safe sanitation, and
protection from urban flooding without imposing unaffordable
costs on families. Unfortunately, that is not the reality for
far too many people. Across the United States, polluted runoff
and sewage degrade sources of drinking water, while rainwater
floods streets and homes. Aging systems are stressed by
changing precipitation patterns and population shifts. In some
rural areas, a complete lack of sanitation infrastructure has
created a public health crisis.
The Infrastructure Investment and Jobs Act, IIJA, also
known as the Bipartisan Infrastructure Law, or BIL--this law
has too many names--took a significant step toward tackling
these problems by providing a critical and historic investment
in America's wastewater and stormwater systems. I want to take
this opportunity to thank all the Members who worked on and
supported that legislation. The funding it provided will make a
real difference to many communities.
Yet even after this influx of supplemental funds, our
country still faces an enormous backlog of clean water
infrastructure needs that can be measured in the hundreds of
billions of dollars. In many places, State and local resources
are simply insufficient to cover these costs. We should not
accept communities having to live with health and environmental
burdens when we have the ability to help.
I ask the members of this committee to work with your
colleagues who have responsibility for appropriations to ensure
that the Clean Water State Revolving Fund receives the full
funding authorized in IIJA. Recent proposals to reduce
appropriations would undercut this committee's work to provide
much-needed resources to cities and towns that have been
waiting years or even decades for assistance.
I also echo the concerns of the other witnesses about the
practice of taking water infrastructure earmarks out of the
State allotment. This practice results in unpredictable
fluctuations in State funding, frustrates public engagement and
long-term planning, and reduces the number of grants available
to disadvantaged communities. Any clean water project earmarks
should be additional to SRF State allotments.
On the subject of disadvantaged communities, IIJA's
requirement to distribute 49 percent of the supplemental funds
as additional subsidy that does not have to be repaid is a
game-changer for small, rural, and low-income communities that
cannot afford a traditional SRF loan. These communities have
faced obstacles to accessing SRF assistance for too long. By
asking EPA and the States to make a greater effort to reach
them, IIJA has created an enhanced awareness of the need to
make the program more inclusive moving forward.
To build on that progress, Congress should not only
maintain existing statutory requirements for additional
subsidization, but also raise the limit beyond 30 percent of
the annual capitalization grant so that States with the
financial capacity to distribute more than that can exercise
their discretion to do so.
At the same time, Congress should provide resources to EPA
for technical assistance to help State SRF managers eliminate
policy barriers that continue to exclude disadvantaged
communities from the program, such as caps on the amount of
subsidy an individual applicant can receive.
Critically, Congress should also establish a permanent
Federal water and sewer assistance program. Communities facing
affordability challenges may defer implementing infrastructure
projects to avoid raising rates on residents. Assistance for
low-income households can not only help people afford basic
needs like water and sewer service, but also put communities in
a better position to access SRF assistance.
As Congress works to establish a permanent program, it
should also provide additional bridge funding for the temporary
LIHWAP program that is about to expire.
I want to make two final points before I conclude.
First, Congress should make the Green Project Reserve a
permanent feature of the Clean Water SRF to guarantee continued
support for sustainable projects that provide multiple benefits
to communities.
And second, Congress should work with EPA to improve
transparency around IIJA spending decisions and SRF funding
more generally by publishing project-level data in an online
dashboard. The American public deserves to know how these
historic funds are being used.
I would be happy to discuss any of these recommendations in
more detail. Thank you.
[Ms. Hammer's prepared statement follows:]

Prepared Statement of Rebecca Hammer, Deputy Director of Federal Water
Policy, Natural Resources Defense Council
Chairman Graves, Ranking Member Larsen, Subcommittee Chair Rouzer,
Subcommittee Ranking Member Napolitano, and members of the
Subcommittee:
Thank you for the opportunity to testify today about the importance
of robust federal funding and support for our nation's clean water
infrastructure. My name is Rebecca Hammer, and I am the deputy director
of federal water policy for the Natural Resources Defense Council
(NRDC). NRDC is an international, non-profit environmental organization
working to protect the world's natural resources, improve public
health, and ensure a safe and sustainable environment for all.
Summary of Testimony
The Infrastructure Investment and Jobs Act of 2021 (IIJA) was a
historic bipartisan investment in our nation's infrastructure that will
make progress toward our goals of providing every person in this
country with clean waterways and safe sanitation, ensuring the long-
term viability of our wastewater and stormwater systems in a changing
environment, and lifting up families and communities who struggle to
bear the burden of unaffordable water and sewer costs. In my testimony,
I will focus on the importance of building upon the momentum of IIJA to
continue closing the clean water infrastructure gap, ensuring that
funds support underserved communities and sustainable projects, and
providing transparency in spending decisions.
To achieve these goals, NRDC recommends:
Funding the Clean Water State Revolving Fund (CWSRF) at
the full IIJA-authorized level, at minimum, with any congressionally
directed spending provided in addition to that funding.
Raising the statutory limit on the amount of additional
subsidization that states are allowed to provide.
Providing resources for the Environmental Protection
Agency (EPA) to provide technical assistance to state CWSRF managers on
best practices for improving the accessibility and fairness of their
programs.
Establishing a permanent federal water and sewer
assistance program, and providing additional funding for the existing
temporary Low-Income Household Water Assistance Program (LIHWAP) as a
bridge to the establishment of that permanent program.
Making the Green Project Reserve a permanent feature of
the CWSRF by codifying it in statute.
Providing more resources for outreach and technical
assistance to potential Green Project Reserve applicants.
Requiring and supporting enhanced public transparency
around IIJA-funded CWSRF projects and technical assistance efforts.
America's Wastewater and Stormwater Systems Face Challenges That
Threaten Their Ability to Provide Clean Water, Thriving Communities,
and a Healthy Environment
All people in America should have access to wastewater and
stormwater infrastructure that works. No matter where they are located,
these systems should provide communities with clean waterways,
effective sanitation, and protection from urban flooding.
Yet in many areas, our nation's infrastructure is not up to the
task of meeting those objectives. Pipes, septic tanks, and treatment
facilities have exceeded their intended lifespans and are breaking
down. As population growth puts stress on wastewater systems, fifteen
percent of treatment plants have already reached or exceeded their
design capacity.\1\ Elsewhere, communities affected by depopulation and
disinvestment struggle to update their infrastructure to meet existing
demand.\2\ Hundreds of cities and towns are still served by combined
sewer systems that overflow into nearby rivers and lakes when it rains,
and many flood control measures are not capable of handling the
increasingly vast quantities of runoff generated by sprawling
development.
---------------------------------------------------------------------------
\1\ American Society of Civil Engineers, 2021 Report Card for
America's Infrastructure: Wastewater, https://
infrastructurereportcard.org/wp-content/uploads/2020/12/Wastewater-
2021.pdf.
\2\ See Rachel Butts and Stephen Gasteyer, ``More Cost per Drop:
Water Rates, Structural Inequality, and Race in the United States--The
Case of Michigan,'' Environmental Practice 13, no. 4 (2011): 386-95,
https://doi.org/10.1017/S1466046611000391.
---------------------------------------------------------------------------
As a result, sewage spills foul our waterways, polluted stormwater
degrades once-productive ecosystems, and rainwater floods our streets
and homes. The American Society of Civil Engineers rated the nation's
wastewater infrastructure a D+, and its stormwater infrastructure a D,
in its most recent infrastructure report card.\3\
---------------------------------------------------------------------------
\3\ American Society of Civil Engineers, 2021 Report Card for
America's Infrastructure, https://infrastructurereportcard.org/.
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Some rural communities do not have access even to inadequate sewer
infrastructure, as they lack functional wastewater treatment
entirely.\4\ According to the U.S. Census Bureau's American Housing
Survey, 180,000 households use rudimentary sewage disposal approaches
like outhouses and chemical toilets, and 35,000 households have no form
of wastewater treatment at all.\5\ Exposure to raw sewage can cause
disease outbreaks and hookworm infections. The situation is especially
dire in regions such as the Black Belt of Alabama, where homes have
``straight pipes'' discharging untreated waste into their yards;
Hawaii, where cesspools are leaking 53 million gallons of untreated
waste into streams, oceans, and drinking water every day; and
indigenous communities in the Southwest and Alaska that lack plumbing
and sanitation infrastructure, just to name a few examples.\6\
---------------------------------------------------------------------------
\4\ EPA, ``Closing America's Wastewater Access Gap Community
Initiative,'' https://www.epa.gov/water-infrastructure/closing-
americas-wastewater-access-gap-community-initiative.
\5\ U.S. Environmental Protection Agency, Office of Water, Report
to Congress on the Prevalence Throughout the U.S. of Low- and Moderate-
Income Households Without Access to a Treatment Works and the Use by
States of Assistance Under Section 603(c)(12) of the Federal Water
Pollution Control Act (July 2021), p. 6, Table 2, https://www.epa.gov/
system/files/documents/2022-01/low-mod-income-without-treatment_report-
to-congress.pdf.
\6\ See Dennis Pillion, ``This Is Unacceptable: EPA Chief Visits
Failing Sewage Systems in Alabama Black Belt,'' AL.com, Mar. 5, 2022,
https://www.al.com/news/2022/03/this-is-unacceptable-epa-chief-visits-
failing-sewage-systems-in-alabama-black-belt.html; Hawaii Department of
Health, Cesspools in Hawai'i, https://health.hawaii.gov/wastewater/
home/cesspools/; Dig Deep & U.S. Water Alliance, Closing the Water
Access Gap in the United States (2019), https://
uswateralliance.org/sites/uswateralliance.org/files/publications/
Closing%20the%20Water
%20Access%20Gap%20in%20the%20United%20States_DIGITAL.pdf.
---------------------------------------------------------------------------
Climate change is adding further stress to our wastewater and
stormwater systems, even those in good condition. Wastewater treatment
plants are typically located at low elevations and along coastlines,
which makes them particularly susceptible to floods and sea level rise.
When tanks and pipes are inundated, these facilities can discharge raw
sewage into nearby communities and waterways. In 2017, flooding from
Hurricane Harvey caused 40 wastewater treatment facilities to become
inoperable and led to the release of 23 million gallons of untreated
wastewater.\7\ Even smaller flooding events, if they occur more often,
can impose significant costs, such as frequent pumping to keep parts
dry and a reduced lifespan of components exposed to water. One study
estimated that four million people in the U.S. could lose access to
municipal wastewater services with 30 centimeters (around 1 foot) of
sea level rise; this estimate rises to 31 million people if sea level
rise reaches 180 centimeters (around 6 feet).\8\
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\7\ Texas Commission on Environmental Quality, Sanitary Sewer
Overflows from Hurricane Harvey, https://www.tceq.texas.gov/response/
hurricanes/sanitary-sewer-overflows; Hurricane Harvey: Status Summary
of Impacted Public Drinking Water and Wastewater Systems, https://
www.tceq.texas.gov/assets/public/response/hurricanes/hurricane-harvey-
tracking-summary.pdf.
\8\ Michelle Hummel et al., ``Sea Level Rise Impacts on Wastewater
Treatment Systems Along the U.S. Coasts,'' Earth's Future (2018),
https://agupubs.onlinelibrary.wiley.com/doi/10.1002/2017EF000805.
---------------------------------------------------------------------------
As heavy precipitation events and extreme storms grow more
frequent, increasingly disruptive flood events are occurring in
communities across the country. Most stormwater systems are designed to
handle the ``10-year'' or ``100-year'' storm, concepts that climate
change has rendered obsolete. Urban flooding already results in $9
billion in damages each year, a figure that is certain to grow unless
we take swift action to adapt and modernize our infrastructure.\9\
These storms also impact water quality: as more intense precipitation
leads to increased runoff, more stormwater pollution is washed into our
waterways, including sediments, nitrogen from agriculture, disease
pathogens, pesticides, herbicides, and more. This pollution imposes
steep costs on communities, including higher treatment costs for the
two-thirds of America's drinking water that comes from rivers, streams,
and lakes.
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\9\ National Academies of Sciences, Engineering, and Medicine,
Framing the Challenge of Urban Flooding in the United States (2019),
https://www.nap.edu/catalog/25381/framing-the-challenge-of-urban-
flooding-in-the-united-states.
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While infrastructure challenges are widespread, they affect certain
communities more severely than others. Across the country,
socioeconomically disadvantaged people face greater challenges in
accessing properly functioning sanitation systems and flooding
controls.\10\ Conventional approaches to paying for infrastructure--
which rely on local sources of revenue to fund investments--have
deepened inequities along racial and economic lines. For example, in
many cities, historically redlined neighborhoods are exposed to a
higher risk of urban flooding than other areas.\11\
---------------------------------------------------------------------------
\10\ See Amy Vanderwarker, ``Water and Environmental Justice,''
chapter 3 in Juliet Christian-Smith et al., A Twenty-First Century U.S.
Water Policy (Oxford, U.K.: Oxford University Press, 2012), 52-89,
https://pacinst.org/wp-content/uploads/2013/02/water_and_environmental_
justice_ch3.pdf.
\11\ Kriston Capps and Christopher Cannon, ``Redlined, Now
Flooding,'' Bloomberg CityLab, March 15, 2021, https://
www.bloomberg.com/graphics/2021-flood-risk-redlining/.
---------------------------------------------------------------------------
In light of these varied threats, federal support for wastewater
and stormwater infrastructure is more important than ever. We must
ensure that all communities have the resources they need to build,
maintain, and operate systems that can serve their residents
effectively and affordably, now and in the future.
The Infrastructure Investment and Jobs Act (IIJA) Provided Historic
Funding to Communities, But More Is Needed
IIJA's appropriation of $11.7 billion in supplemental funding for
the Clean Water State Revolving Fund (CWSRF), our nation's largest
dedicated source of wastewater and stormwater financing, was a much-
needed investment in American communities' clean water infrastructure.
That funding--distributed over a five-year period--will support efforts
across the country to clean up waterways and provide safe sanitation.
States have already begun to award IIJA funds to projects that will fix
broken sewer pipes and pumps, upgrade treatment plants to provide
greater pollution reductions, extend service to areas that lack
centralized wastewater treatment, restore wetlands and floodplains to
prevent flooding, implement energy and water efficiency upgrades, and
eliminate combined sewer overflows.
These funds are providing a lifeline for many communities that have
been waiting for assistance, in some cases for years or even decades.
Yet despite the progress this investment will make toward addressing
our clean water infrastructure backlog, an enormous gap still exists.
IIJA's $11.7 billion in CWSRF funds represent a small fraction of
the $271 billion minimum that communities are estimated to need in
order to maintain and repair their wastewater and stormwater
infrastructure over the next twenty years.\12\ In fact, the true need
is certainly much higher, as that EPA dollar figure is now a decade out
of date and is widely agreed to be a substantial underestimate--it does
not account for inflation or include a reliable inventory of necessary
nonpoint source projects. It also does not consider the resources
needed to adapt to climate change, which utilities say could add
hundreds of billions of dollars in additional water infrastructure
funding requirements through the middle of the century.\13\ A new EPA
survey of clean water infrastructure needs will be released next year,
which should give us a better understanding of the true level of
investment required.
---------------------------------------------------------------------------
\12\ U.S. Environmental Protection Agency, Clean Watershed Needs
Survey 2012 Report to Congress, https://www.epa.gov/cwns/clean-
watersheds-needs-survey-cwns-report-congress-2012.
\13\ National Association of Clean Water Agencies & Association of
Metropolitan Water Agencies, Confronting Climate Change: An Early
Analysis of Water and Wastewater Adaptation Costs (2009), https://
www2.nacwa.org/images/stories/public/2009-10-28ccreport.pdf.
---------------------------------------------------------------------------
No matter what the specific estimate is, it is clear that need far
outstrips the resources that have been provided. Even accounting for
the one-time influx of supplemental IIJA funds, the federal
government's contribution to water infrastructure spending as a share
of total investment has fallen dramatically over the last several
decades.\14\ When federal support is unavailable, state and local
governments are left to pick up the tab. This burden has strained
municipal and utility budgets across the country, and many important
projects are not being implemented as a result. The Value of Water
Campaign has estimated the annual funding gap for drinking water,
wastewater, and stormwater infrastructure--in other words, the gap
between actual spending and estimated needs each year--is $82
billion.\15\ This figure tells us that relying on state and local
resources is not an adequate way to fund infrastructure that is
necessary to keep our families safe and healthy.
---------------------------------------------------------------------------
\14\ Value of Water Campaign, The Economic Benefits of Investing in
Water Infrastructure (2017), p. 5, http://thevalueofwater.org/sites/
default/files/Economic%20Impact%20of%20Investing
%20in%20Water%20Infrastructure_VOW_FINAL_pages.pdf.
\15\ Id. at p. 2.
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Because of this heavy reliance on local funds, the quality of a
community's infrastructure largely depends on the financial capacity of
its residents. Communities with less wealth have been forced to
postpone or forego important projects, endangering public health and
environmental quality. Other communities have sought alternative, more
expensive financing for their projects, which requires them to raise
rates and jeopardize the affordability of service for their customers.
Neither alternative is acceptable.
In order to bring relief to communities and ensure that all people
in this country have access to high-quality infrastructure, Congress
should fund the Clean Water State Revolving Fund at least at the full
IIJA-authorized level. CWSRF appropriations in the past two years have
fallen short of the authorized amount by more than half. Concerningly,
recent budget proposals for FY24 would slash appropriated funding for
the program even further. The intent of IIJA was to supplement current
funding levels and provide help to more communities than ever before,
not to offset steep cuts to annual spending and leave overall program
investments barely holding steady.
Not only is total program funding falling short, but the recent
practice of diverting that funding away from state CWSRF programs
toward congressionally directed spending is particularly concerning. In
FY23, more than half of the total CWSRF appropriation was directed to
specific earmarked projects, leaving less than half for states to
allocate through their programs.\16\ Proposed FY24 spending bills would
increase the proportion of funding directed to earmarks even more
dramatically.
---------------------------------------------------------------------------
\16\ See Tony Room, ``States Lose Federal Water Funds as Lawmakers
Redirect Money to Pet Projects,'' Washington Post, July 24, 2023,
https://www.washingtonpost.com/business/2023/07/24/water-
infrastructure-congress-earmarks/.
---------------------------------------------------------------------------
This shift has several negative consequences. First, it circumvents
the existing allotment formula prescribing how much CWSRF funding flows
to states each year, creating a situation where some states come out
ahead and others lose.\17\ The unpredictability of these fluctuations
creates confusion and makes it difficult for states to implement their
long-term infrastructure improvement plans. Second, while funds that
flow through state CWSRF programs are subject to public engagement and
oversight through the annual adoption of the state's intended use plan,
there is no formal opportunity for the public to weigh in on decisions
around earmarks, frustrating transparency and accountability. Third,
the CWSRF program requirements that apply to state-distributed funds,
such as the reservation of grant funds for disadvantaged communities,
do not apply to congressionally directed spending. This can result in
wealthy, politically connected communities receiving earmark grant
funds they do not need and would not have qualified for under normal
CWSRF rules, leaving such funds unavailable for lower-income
communities that depend on them.\18\
---------------------------------------------------------------------------
\17\ Id. (noting that 38 states have been shortchanged about $660
million in DWSRF and CWSRF funding combined over the last two years due
to earmarks).
\18\ Id. (noting that in some states, very few congressionally
directed spending projects have been located in disadvantaged
communities).
---------------------------------------------------------------------------
While many congressionally directed spending projects are
worthwhile projects with positive benefits for communities, funding for
such projects should come on top of the regular annual CWSRF
appropriation, rather than being carved out of it.
Reducing appropriations and diverting funds toward earmarks would
diminish the impact of IIJA's historic funds and undermine that
legislation's purpose. If we want to make a meaningful dent in our
country's infrastructure needs, we must increase--not decrease--CWSRF
annual appropriations. We must also fully fund the other important
programs authorized in IIJA, such as the Sewer Overflow and Stormwater
Reuse Municipal Grants Program and the Household Decentralized
Wastewater Grant Program. Alongside these funds, Congress should
provide additional resources to EPA and state CWSRF administrators so
they can continue to build capacity to operate these programs
efficiently.
A recent national poll of U.S. voters shows that the vast majority
of people (68%) believe water infrastructure should be a top priority
for investment by the federal government, a higher positive response
rate than for any other type of infrastructure.\19\ Increasing federal
funding for water systems would not only support public health and the
environment, it would also generate billions of dollars in economic
activity and create thousands of jobs.\20\ And it would make funds
available for beneficial but cost-intensive infrastructure such as
water recycling and reuse projects that can help arid regions adapt to
conditions of increasing water scarcity. Members of this Committee and
Subcommittee should work with their colleagues on the Appropriations
Committee to ensure that substantially enhanced funding for the CWSRF
and other clean water programs is provided in FY24 and beyond.
---------------------------------------------------------------------------
\19\ Water Hub, National Voter Poll on Water Access, Affordability,
and Safety (Aug. 2023), https://waterhub.org/wp-content/uploads/2023/
09/August-2023-Polling-Memo.pdf.
\20\ Value of Water Campaign, The Economic Benefits of Investing in
Water Infrastructure.
---------------------------------------------------------------------------
Congress Should Support Efforts to Direct Funding to Disadvantaged
Communities and Improve Water & Sewer Affordability
A key component of IIJA's investment in clean water infrastructure
was its requirement that states distribute 49 percent of the
supplemental funds in the form of additional subsidization--grants,
principal forgiveness, and other forms of assistance that recipients do
not have to repay.\21\ IIJA also amended the Clean Water Act to require
that states distribute at least 10 percent of their annual CWSRF
capitalization grants in the form of additional subsidization each
year, leaving in place the statute's existing maximum limit of 30
percent.\22\
---------------------------------------------------------------------------
\21\ Pub. L. No. 117-58, Title VI.
\22\ Pub. L. No. 117-58, Sec. 50210(a)(1)(B) (codified at 33
U.S.C. Sec. 1383(i)(3)(B)(i)(II)).
---------------------------------------------------------------------------
Additional subsidization is a critical tool for ensuring that all
communities can take advantage of CWSRF assistance. Communities with a
small, declining, and/or low-income rate base often experience
difficulty obtaining financing for infrastructure projects and in many
cases cannot afford to pay back even a low-interest CWSRF loan. These
jurisdictions may have the means to carry out priority projects only if
they receive additional subsidization. As a result, additional
subsidization facilitates high-impact projects that would not otherwise
get built. This is what the CWSRF program is about at its core:
ensuring that the environmental and public health benefits of good-
quality infrastructure are not a privilege for the few, but rather are
accessible to everyone in this country, even those living in less
affluent jurisdictions.
Prior to IIJA, states distributed relatively little funding in the
form of additional subsidization. From 2011 to 2020, for example,
states distributed only about 4 percent of total assistance as
additional subsidization ($2.6 billion out of $62.5 billion).\23\ Many
CWSRF program managers have been hesitant to distribute funding that
does not ``revolve'' as loan repayments because of concerns about the
long-term viability of the state's fund. This perspective has led to
state programs that are financially stable but are not serving the
communities that need help the most, frustrating the purpose and goals
of the CWSRF.
---------------------------------------------------------------------------
\23\ EPA, Clean Water SRF Program Information: National Summary,
February 2022, 15-16, line 109; 19-20, line 128; and 65-66, lines 321
and 323, https://www.epa.gov/system/files/documents/2022-03/us21.pdf.
---------------------------------------------------------------------------
In its focus on providing more funding as grants and principal
forgiveness, IIJA is helping to bring about a shift in mindset that is
long overdue. Requiring nearly half of the supplemental funds to be
distributed as additional subsidization has had a significant impact on
the way EPA and states implement the CWSRF program. It has raised
awareness of the need to adopt policies that make the program
accessible to a wider range of potential recipients and to conduct
outreach to communities that have not participated in the past.
Implementing this additional subsidization requirement has proven to be
feasible and has already resulted in communities receiving CWSRF
assistance that have never received it before.
Congress should build upon IIJA's progress in this area by raising
the permanent statutory limit on additional subsidization beyond 30
percent of the annual capitalization grant. Given the immense positive
impact of these funds, states should have the discretion to distribute
more subsidization than this arbitrarily low threshold allows, assuming
they determine that they have the community demand and financial
capacity to do so.
That said, even if greater amounts of additional subsidization
become available, many states still have policies on the books--in
their intended use plans (IUPs), regulations, and state statutes--that
make it difficult for certain underserved communities to access that
funding. For example, many states cap the amount of additional
subsidization an individual recipient can receive, excluding the
neediest jurisdictions from accessing CWSRF funds. Some states set this
cap as low as 20 or 30 percent of the total award. A low-income
community that cannot finance the remaining 70 or 80 percent of the
project costs on its own will not be able to access CWSRF assistance
with such a cap in place. Other state policies that make it harder for
communities to obtain funding include limiting subsidization
eligibility based on strict population thresholds, not allowing
disadvantaged areas within non-disadvantaged communities to qualify for
subsidization, and failing to account for affordability or financial
need within the state's project ranking system.
Policies like these have led to inequities in the distribution of
past years' CWSRF funding. A nationwide analysis of CWSRF awards
between 2011 and 2020 found that small and minority communities were
statistically less likely to receive assistance.\24\ Federal guidance
is needed to encourage and assist states in updating their policies to
ensure that all communities have a shot at obtaining CWSRF funds.
Congress should provide resources for EPA to provide technical
assistance to state CWSRF managers on best practices for improving
accessibility and fairness in their programs.
---------------------------------------------------------------------------
\24\ Katy Hansen, EPIC & Becky Hammer, NRDC, A Fairer Funding
Stream: How Reforming the Clean Water State Revolving Fund Can
Equitably Improve Water Infrastructure Across the Country (2022),
https://www.nrdc.org/sites/default/files/clean-water-state-revolving-
fund-infrastructure-report.pdf.
---------------------------------------------------------------------------
Beyond state program rules, another policy mechanism to make it
easier for disadvantaged communities to access CWSRF funds is financial
assistance for low-income customers. Water and wastewater utility bills
have been increasing at more than three times the rate of inflation in
recent years.\25\ Researchers have found that 10 percent of households
spend more than 4.5% of their annual income on essential water and
sewer services.\26\ Communities facing greater affordability challenges
often defer implementing infrastructure projects to avoid raising rates
on vulnerable residents. Conversely, communities with more affordable
sewer rates that do not unduly burden their customers are in a better
position to access CWSRF assistance and carry out needed construction
and maintenance work.
---------------------------------------------------------------------------
\25\ David Harrison, ``Why Your Water Bill Is Rising Much Faster
Than Inflation,'' The Wall Street Journal, March 15, 2018, https://
www.wsj.com/articles/who-is-paying-to-fix-outdated-water-and-sewer-
systems-you-are-1521106201.
\26\ Diego S. Cardoso & Casey J. Wichman, ``Water Affordability in
the United States,'' Water Resources Research, Vol. 58, Issue 12,
November 2022, https://agupubs.onlinelibrary.wiley.com/doi/abs/10.1029/
2022WR032206.
---------------------------------------------------------------------------
In order to support water and sewer affordability in all
communities, Congress should establish a permanent federal water and
sewer assistance program. In the meantime, Congress should also provide
additional funding in FY24 for the existing temporary Low-Income
Household Water Assistance Program (LIHWAP) as a bridge to the
establishment of that permanent program. Through the third quarter of
FY23, LIHWAP helped over 1.1 million households nationwide afford their
water and sewer bills.\27\ Recent national polling found that 79
percent of voters support the federal government helping lower-income
families with their water and sewer bills, and 76 percent support
extending LIHWAP funding when the program expires at the end of this
fiscal year.\28\ Drawing from experience with program implementation to
date, any LIHWAP funding moving forward should require improvements to
administration, such as automatic enrollment of households that already
participate in other income-qualified programs.
---------------------------------------------------------------------------
\27\ Quarterly LIHWAP Report Snapshot, https://lihwap-hhs-
acf.opendata.arcgis.com/pages/quarterly-snapshot.
\28\ Water Hub, National Voter Poll on Water Access, Affordability,
and Safety, p. 1-2.
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Congress Should Support Increased Investment in Green Projects
A priority in CWSRF program implementation over the past decade and
a half has been to encourage applicants to carry out sustainable
``green'' projects: green stormwater infrastructure, water and energy
efficiency upgrades, and other environmentally innovative activities.
These projects can provide wide-ranging benefits to communities. For
example, green infrastructure reduces stormwater volumes and pollutant
loads, leading to cleaner waterways, reduced wastewater treatment needs
for combined sewer systems, reduced flooding, and increased groundwater
recharge. It is frequently more cost-effective than gray
infrastructure, so it can reduce the costs of water quality compliance
and flood control for communities and ratepayers.\29\
---------------------------------------------------------------------------
\29\ Environmental Protection Agency, Green Infrastructure Cost-
Benefit Resources, https://www.epa.gov/green-infrastructure/green-
infrastructure-cost-benefit-resources.
---------------------------------------------------------------------------
For its first two decades, the CWSRF did not fund many green
projects. According to the EPA, many states had ``little or no
history'' of funding such projects because their programs focused on
traditional infrastructure, or because state law presented
obstacles.\30\ Then, in 2009, Congress passed the American Recovery and
Reinvestment Act (ARRA). ARRA provided supplemental appropriations for
the CWSRF and required that states allocate at least 20 percent of
these new funds as a Green Project Reserve (GPR) for green
infrastructure, water efficiency, energy efficiency, and other
environmentally innovative projects. It also made GPR projects eligible
for additional subsidization.\31\ Since 2009, Congress has extended the
GPR in appropriations acts each year, though starting in FY2012 the
requirement was reduced from 20 percent to 10 percent of the state's
annual CWSRF capitalization grant.\32\
---------------------------------------------------------------------------
\30\ EPA, ARRA Clean Water State Revolving Fund Green Project
Reserve Report (2012), p. 8, https://www.epa.gov/sites/production/
files/2015-04/documents/arra_green_project_reserve_
report.pdf.
\31\ American Recovery and Reinvestment Act of 2009, P.L. 111-5
(123 Stat. 169).
\32\ See Congressional Research Service, ``Greening'' EPA's Water
Infrastructure Programs through the Green Project Reserve (2016),
https://www.everycrsreport.com/reports/IN10540.html.
---------------------------------------------------------------------------
The establishment of the Green Project Reserve led many states to
fund green projects with CWSRF resources for the first time. Over the
past fourteen years, the GPR has funded hundreds of beneficial green
infrastructure projects across the country--everything from urban
reforestation and wetlands preservation to green roofs and roadway
retrofits. Additionally, the GPR has supported energy efficiency and
water efficiency projects that advance clean water objectives by
upgrading the efficiency of pumps and motors, powering clean water
facilities with renewable energy from on-site resources, and reducing
both customer and facility water use. Decentralized wastewater
treatment solutions in areas lacking access to sanitation are also
eligible for the GPR in the ``environmentally innovative''
category.\33\
---------------------------------------------------------------------------
\33\ EPA, ``2012 Clean Water State Revolving Fund 10% Green Project
Reserve: Guidance for Determining Project Eligibility,'' pp. 11-12,
https://www.epa.gov/sites/production/files/2015-04/documents/
green_project_reserve_eligibility_guidance.pdf.
---------------------------------------------------------------------------
The EPA determined last year that if the Green Project Reserve is
included in an annual appropriations bill, it applies to the IIJA
capitalization grants for the corresponding fiscal year.\34\ Green
projects are also eligible for the 49% of supplemental IIJA CWSRF funds
that must be distributed as additional subsidization (discussed
above).\35\ As a result, IIJA has created strong incentives for the
implementation of sustainable infrastructure and has already funded
dozens of GPR-eligible projects.
---------------------------------------------------------------------------
\34\ Radhika Fox, EPA Assistant Administrator, Memorandum:
Implementation of the Clean Water and Drinking Water State Revolving
Fund Provisions of the Bipartisan Infrastructure Law (March 2022), p.
22, https://www.epa.gov/system/files/documents/2022-03/combined_srf-
implementation-memo_final_03.2022.pdf.
\35\ Id., p. 3.
---------------------------------------------------------------------------
Despite the program's growing impact, overall the CWSRF has been
underutilized as a funding source for green projects. Since the
establishment of the Green Project Reserve in 2009, EPA data indicate
that only 10.6 percent of total CWSRF assistance has gone to GPR
projects ($10.2 billion out of $95.7 billion).\36\
---------------------------------------------------------------------------
\36\ EPA, Clean Water SRF Program Information: National Summary
(February 2023), https://www.epa.gov/system/files/documents/2023-02/
us.pdf.
---------------------------------------------------------------------------
Under the existing Green Project Reserve requirement, states do not
have strong incentives to educate potential applicants about the
benefits of green projects and the availability of GPR funding, nor to
assist them with their funding applications. The current 10 percent
requirement only applies to the extent that a state receives
``sufficient eligible project applications.'' \37\ EPA has interpreted
this rule to require a ``good faith solicitation effort'' by the state
to identify eligible GPR projects, but the state's annual open
solicitation for CWSRF projects is deemed to meet the requirement, even
if the state does not conduct any outreach on the Green Project Reserve
specifically.\38\ This interpretation largely takes the burden off the
state CWSRF program to actively solicit potential GPR projects. As a
result, states sometimes fail to meet the GPR requirement. For example,
in 2020 Florida fell short of the requirement because it did not
receive sufficient project applications.\39\ Oregon did not fund a
single GPR project that year.\40\ Missouri is two years behind on
awarding its GPR dollars.\41\
---------------------------------------------------------------------------
\37\ See Consolidated Appropriations Act 2023, p. 335, https://
www.congress.gov/117/plaws/publ328/PLAW-117publ328.pdf.
\38\ See EPA, Procedures for Implementing Certain Provisions of
EPA's Fiscal Year 2012 Appropriations Affecting the Clean Water and
Drinking Water State Revolving Fund Programs, p. 3, https://
www.epa.gov/sites/production/files/documents/
final_fy12_srf_guidelines_1.pdf.
\39\ Florida Department of Environmental Protection, CWSRF 2020
Annual Report, p. 13, https://floridadep.gov/sites/default/files/
CWSRF%20Annual%20Report%202020.pdf.
\40\ Oregon Department of Environmental Quality, Clean Water State
Revolving Fund Annual Report, September 2020, p. 7, https://
www.oregon.gov/deq/wq/Documents/cwsrfAnnualRep
2020.pdf.
\41\ Missouri Department of Natural Resources, Clean Water State
Revolving Fund 2022 Annual Report, pp. 10, https://dnr.mo.gov/document-
search/fiscal-year-2022-clean-water-state-revolving-fund-annual-report.
---------------------------------------------------------------------------
Additionally, the amount of funding that Congress requires states
to allocate to the Green Project Reserve has fluctuated over time and
has never been codified in statute, making potential applicants
uncertain about whether GPR funds will be available for their projects
in future years.\42\ This uncertainty depresses demand for funds.
---------------------------------------------------------------------------
\42\ See Illinois EPA, Water Pollution Control Loan Program 2024
Intended Use Plan (July 2023), p. 16, https://epa.illinois.gov/content/
dam/soi/en/web/epa/topics/grants-loans/state-revolving-fund/documents/
2024-iup/WPCLP-2024-IUP-Final.pdf (``Despite uncertainty regarding the
Federal GPR requirement, the Illinois EPA is taking steps to
institutionalize certain green infrastructure practices . . .'').
---------------------------------------------------------------------------
To resolve this issue, Congress should end the process of inserting
the Green Project Reserve requirement into annual appropriations bills
and codify it permanently in statute. A statutory Green Project Reserve
is needed to ensure that state CWSRF programs have a continued mandate
to fund green projects. As pre-2009 history shows, without the GPR
requirement it is likely that fewer green projects will receive CWSRF
assistance. Decades of implementation have proven that these projects
offer significant benefits to utilities, ratepayers, the environment,
and public health. Congress should affirm its durable support for them
by writing the GPR into law.
Finally, when states fall short of the Green Project Reserve
minimum requirement, it isn't because there are no possible green
projects for communities to implement. According to the EPA, many
potential GPR applicants are simply unaware of the funding
opportunities available.\43\ States can address this knowledge gap
through marketing and outreach, but they need resources in order to do
so. Small and disadvantaged communities need technical assistance to
develop projects and complete applications, and this assistance
requires resources as well. Congress should set aside more funding for
states to build awareness and expertise among potential GPR applicants,
with the goal of ensuring that no state ever falls short of its minimum
Green Project Reserve requirement due to a lack of eligible project
applications.
---------------------------------------------------------------------------
\43\ EPA, Financing Green Infrastructure: A Best Practices Guide
for the Clean Water State Revolving Fund (2015), p. 3, https://
www.epa.gov/sites/default/files/2016-01/documents/
final_gi_best_practices_guide_12-9-15.pdf.
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Congress Should Require Increased Transparency Around Spending
Decisions
With a federal investment as substantial and historic as IIJA, it
is critical that the public understand which communities are receiving
funds and what kinds of projects they are carrying out. At present, it
is difficult to access information about states' CWSRF IIJA awards in a
timely or efficient manner. There is no centralized public database of
funded projects, so stakeholders must look at each state's intended use
plan, one by one, and those plans do not always contain details on
specific projects or the kind of consistent information that would make
national data aggregation possible. This situation frustrates
accountability for ensuring that IIJA's critical supplemental funding
is being spent efficiently and equitably. Greater transparency around
spending decisions is required in order to understand where policy
reforms may be needed at the federal and state levels to improve
program operations and achieve better results.
Congress should direct EPA to publish all IIJA clean water
infrastructure spending data--with the long-term goal of including all
CWSRF award data, not limited to this supplemental funding--in a
nationwide online database or dashboard that is updated on a frequent
basis. The database should be searchable by state, county, and census
tract and include other important standardized information such as the
financial terms of the award, the project type and description, the
recipient's eligibility to receive additional subsidization under the
state's affordability criteria, and the project's eligibility under the
Green Project Reserve. Such a requirement would improve EPA's ability
to oversee, manage, and monitor this substantial investment of public
funds. It would also be consistent with existing federal policies
requiring agencies to assess the results of other government programs.
Finally, it is important for the public to understand where IIJA's
substantial technical assistance funding is going and what assistance
providers are doing with it. The Biden administration has made several
announcements over the past year about large grants distributed to
Environmental Finance Centers and other entities to help communities
access IIJA funds.\44\ The recipients of these grants should be
required to publicly report on their activities, including the
communities they assist and whether those communities are ultimately
successful in obtaining IIJA funds. Information must be available to
assess their performance so that EPA can make informed decisions about
which providers to support in future years.
---------------------------------------------------------------------------
\44\ See EPA, Water Technical Assistance, https://www.epa.gov/
water-infrastructure/water-technical-assistance-waterta.
---------------------------------------------------------------------------
Congress should support all of these transparency, tracking, and
reporting activities by providing the resources necessary to carry them
out. Stronger reporting requirements could be implemented with little
burden on CWSRF recipients if Congress provides adequate resources for
data collection and instructs EPA to take the lead on gathering and
aggregating the data.
* * * * *
Thank you for the opportunity to testify today. NRDC looks forward
to working with the Subcommittee on solutions to provide all
communities with high-quality, sustainable, and affordable wastewater
and stormwater infrastructure.

Mr. Rouzer. Thank you very much. I have to say, you all get
the gold star, the gold medal, whatever you want. I have never
seen four panelists stay within 5 minutes.
[Laughter.]
Mr. Rouzer. Staff, have you ever seen all four stay within
5 minutes?
Mrs. Napolitano. And even [inaudible].
Mr. Rouzer. I tell you what, you all--I applaud.
[Laughter.]
Mr. Rouzer. Anyway, I can assure you no Member of Congress
can stay under 5 minutes.
[Laughter.]
Mr. Rouzer. So, with that, I will allocate 5 minutes to
myself.
So, Ms. Johnson, I am going to start with you. Obviously,
it's no secret we have an aging infrastructure. The average age
is 40 to 50 years old. That is just the average. I mentioned my
town of Chadbourn in my district that has had a system in place
since 1883.
My question is this: What do you estimate the total need in
the country to be?
And then, can you talk a little bit about what the
investment is, as well? Because it is a pretty large gap there.
Is the need twice as large as the available supply of
dollars? Ten times? What is your thought?
Ms. Johnson. I don't know specifically the need of the
entire Nation off the top of my head. I know in Oklahoma, the
last update we had to our comprehensive water plan, we
identified an $80 billion infrastructure need over the next 50
years for water and wastewater infrastructure. And since the
inception of all of our financing programs, we have funded
approximately $6 billion of infrastructure needs.
So, there is quite a difference, I am sure, that can
extrapolate to the entire country's demand for water and
wastewater infrastructure.
Mr. Rouzer. Well, absolutely. I think it is important to
underscore just what a wide gap exists there, and we must
maximize every dollar that we can. It is going to get harder
and harder to get the dollars needed, given the nature of the
budget situation here in Washington with a $32-$33 trillion
debt. There is going to be more and more pressure to cut
discretionary dollars because nobody really wants to touch the
mandatory spending, which is what really is driving the debt.
Let me ask this. In your experience running a Clean Water
SRF, what do you see as the easiest hurdle or hurdles to remove
to help ensure that we are maximizing each Federal dollar?
Ms. Johnson. While the SRF programs are a great model for
leveraging the Federal funding and maximizing capacity in their
State, in Oklahoma we are a leveraged State, so, we issue debt
in order to meet the demand in our State for infrastructure
financing. So, as far as hurdles, of course, all of the Federal
mandates that I mentioned earlier are increasing the cost of
projects, while not necessarily meeting the intention of the
Federal mandate or the goals of the Clean Water Act.
So, removing or revising those Federal mandates after--a
lot of these Federal mandates have been in place for more than
a decade. So, we are looking at those mandates to make sure
that they have had the transformational gap that Congress
intended when they proposed those mandates. And if they are not
meeting that intention, then maybe it's time to revise them.
Mr. Rouzer. Let me ask this, and I will open it up for the
rest of the panel. Are we concerned that maybe we are putting
too much money towards grants movement that way that is going
to shortchange us long term?
Ms. Johnson. I believe so. While it is very important for
the very small, disadvantaged communities to have an
opportunity for grant funding to finance their infrastructure
needs, grant funding can have a negative impact on
infrastructure financing and public health and the environment
protection because large grant programs like we are seeing
currently, communities rely on that and delay their
infrastructure projects, hoping that they are the next in line
to receive a grant that may or may not come their way. So,
while they are waiting for grant funding, their infrastructure
is not meeting the compliance requirements for the Clean Water
Act.
Mr. Rouzer. Thank you.
Mr. Swingle and Mr. Proctor, I am running out of time here.
But real quickly, are there any specific suggestions for
Congress as it relates to permitting reform?
This is a subject that we are taking a real close look at.
Either one of you. And turn on your microphone.
Mr. Swingle. We represent four different member governments
and having flexibility to make sure that we are using our
dollars as wisely as possible. So, tying into integrated
planning and also funding flexibility, as well, is absolutely
critical.
Mr. Rouzer. Thank you.
My time is expired. Mrs. Napolitano.
Mrs. Napolitano. Thank you, Mr. Chair.
To all the panel, thank you for recognizing the historic
clean water investment contained in the BIL. More than ever,
sustaining the Federal commitment to robust infrastructure
investments requires constant attention. And as the chairman
stated, we have an aging infrastructure. Do you support cutting
clean water infrastructure investment by roughly two-thirds, as
recommended by my colleagues?
And what would be the consequences of such a cut?
Ms. Johnson. No, we do not support cuts to the SRF
programs. In fact, we suggest fully funding the SRFs to the
full authorization levels.
Mrs. Napolitano. Mr. Swingle?
Mr. Swingle. And we agree that funding the full
authorization levels is important.
Having a diverse funding portfolio, as I stated, is
absolutely critical. We are continuing to see increasing
regulations, and the current inflationary environment in the
utility sector is as significant or more profound than many
other areas of the economy.
Mrs. Napolitano. Thank you.
Mr. Proctor.
Mr. Proctor. As I mentioned in my opening remarks, we
agree, as well.
Two things to keep in mind. Without full funding, the
States are deprived of critical administrative resources that
they need to implement the programs, whether they are regular
programs or earmarked. But another thing is, if the funds
aren't fully funded, they don't continue to revolve to where
the money gets lent out, and then it gets paid back, and then
it is available for future projects, as well.
Mrs. Napolitano. Ms. Hammer?
Ms. Hammer. We absolutely would not support cuts. As the
other witnesses have stated, the demand far exceeds the
available resources.
Just in one State, Texas, last year, they had $378 million
to distribute through their Clean Water SRF, but received
requests for $2.8 billion worth of projects. So, they could
fund only about one-eighth of the existing demand. And now that
is--every State has different needs, but it is clear that the
demand is there, and cutting available funds would have huge
impacts.
Mrs. Napolitano. Thank you.
Mr. Swingle and Ms. Hammer, last Congress, we worked
closely with your organizations to reauthorize the Clean Water
State Revolving Fund for the first time since its enactment.
There were, however, some provisions not included in the final
package, including increasing the percentage of funds awarded
as a grant rather than loans. Do your organizations support
increasing the amounts of base SRF funds to go to our
communities as grant or loan substitutes?
Ms. Johnson. Let me make sure I understand the question.
Are you asking if we support increased grant funding and loan
forgiveness?
Mrs. Napolitano. Yes, ma'am, but I asked the question to
Mr. Swingle and Ms. Becky Hammer.
Ms. Johnson. Thank you.
Mr. Swingle. Thank you. Yes, we support the grant funding
as proposed in IIJA. We think that that particularly, again, in
this current pace of change for utilities, that those grant
funds do play a significant role, particularly for
disadvantaged communities.
We are seeing--we often, as utilities, think in terms of
not years, but decades, when we are making infrastructure
investments. And because of the pace of change of the
regulatory environment and those cost changes, the grants do
particularly help those small, disadvantaged communities in
adapting to supporting their ratepayers.
Mrs. Napolitano. Thank you.
Ms. Hammer?
Ms. Hammer. Yes. Additional subsidization grants are really
the only option for a large number of communities, as well as
certain types of projects. For example, important nonpoint
source projects that don't have a revenue stream available to
repay a loan would not be possible without additional
subsidization.
Not all States operate separate grant programs that could
make up the difference if additional subsidization weren't
available. And to me, it really goes to the core of what the
purpose of this program is. Do we really want to have a fund
that revolves in perpetuity, but doesn't help the communities
that actually need assistance?
The entire purpose of this program is to help communities
implement infrastructure projects that they wouldn't be able to
do otherwise. So, if anything, we should be distributing more
funding as subsidy.
Mrs. Napolitano. Thank you.
Mr. Proctor, what has been the single tangible benefit of
the requirement to utilize American-made iron and steel in
clean water infrastructure projects for the iron and steel
industry in the U.S.?
Do you think this provision fundamentally increases the
cost of clean water projects?
Mr. Proctor. Well, speaking on behalf of McWane, I will
talk with respect to American iron and steel, which is the
program most applicable to our industry. And to quote EPA, it
has been a resounding success. It has increased capacity, it
has brought production back to the U.S., it has increased jobs.
It has done everything that it was intended to do.
And to give you an example from our industry, there used to
be dozens of manufacturers of waterworks fittings, which are
products that are critical to pipelines across the country. By
the time the Great Recession hit, we were down to one last
remaining domestic manufacturer, and that was us. And we were
close to having to close our last plant. But the passage of AIS
saved all of those jobs. Not only that, but it gave us the
incentive to reinvest in the plant and increase jobs.
And more importantly, the very companies that were the
architects of the demise of the domestic industry realized that
if they wanted to participate in these programs, they had to
reshore the production of those products. So, they opened up a
new plant in Oklahoma, and they are today manufacturing those
products that they tried to take over to other countries across
the ocean.
Mrs. Napolitano. Thank you.
Sorry, Mr. Chair. I yield back.
Mr. Rouzer. The gentlelady yields back. Mr. Van Orden, you
are recognized for 5 minutes.
Mr. Van Orden. Thank you, Mr. Chairman. I understand
everybody here has the sense of displeasure with
congressionally directed spending at the expense of the State
allocations. But I live in a very rural area, and I will be
frank with you. Sometimes people play politics with this issue,
and I think that is, frankly, despicable. I submitted several
congressionally directed spending things for projects, and my
primary--my cutoff in order of precedence was clean water as
the first one, and then it was public safety. So, I get what
you are saying.
But unfortunately, again, sometimes when the Federal
Government sends moneys to State governments, they are
allocated in a way that there is a big political thumb on that.
And rural areas, which the Third Congressional District of the
State of Wisconsin predominantly is, oftentimes are neglected.
So, I really--I want you to think about that in that context,
that we are not throwing stuff around here and trying to take
away from the State's ability to allocate funds for clean
water. We want to make sure that Federal moneys are going
directly to where they can have the most impact. Is that clear
with everybody here?
So, a lot of things that I hear from my folks that make
these projects more difficult to administer is the moving
needle from the EPA, especially when we are talking about
different levels for agricultural runoff, phosphates, nitrates,
and now the PFAS. So, I want to ask you--and we will just start
with Ms. Johnson, if that is all right--with the EPA saying
that the PFAS is in our hazardous materials, essentially, a lot
of the concerns from our municipal water treatment facilities
is that they are going to be held liable in some way for not
being able to get the water to a clean enough level to a moving
standard from the EPA. Have you heard that?
Ms. Johnson. I have not heard that, personally. I know
communities are used to the ever-changing regulations in the
water and wastewater industry and will do everything they can
to meet those compliance requirements.
Mr. Van Orden. So, when you are saying that because Members
of Congress, who speak directly to our constituents on a daily
basis, we are cherry picking money out of these funds to put
them directly where they are needed, add some uncertainty?
The same thing happened--uncertainty for planning
financially, the same thing happens to each one of these
municipalities with this moving target.
Mr. Swingle, have you heard from folks about the issue of
the moving target from the EPA for these different standards?
I mean, you are one of the guys, right?
Mr. Swingle. Excuse me?
Mr. Van Orden. You are running one of these, correct?
Mr. Swingle. I am sorry, I didn't understand.
Mr. Van Orden. What you do for your day job, you are
predominantly responsible for conducting these operations,
correct?
Mr. Swingle. Yes, that is correct. Now----
Mr. Van Orden [interrupting]. So, then, I guess, have you
heard this, Mr. Swingle?
Mr. Swingle. We do operate under the Florida Department of
Environmental Protection, which is a delegated authority. And
so, we do have uncertainty about where we will land with PFAS.
And in Florida in particular, it is somewhat complex
because as a utility, we have eliminated all surface water
discharges, but use our treated effluent that is to public
reuse standards for replenishing groundwater. And the
complexities of that uncertainty associated with the regulatory
environment, and whether that would be regulated by the MCLs
that are proposed on the drinking water side or on the--
through, ultimately, a flow-down from EPA on the wastewater
side, does create significant uncertainty for us.
Mr. Van Orden. So, from your perspective, from your
position where you are at, if the EPA could be more consistent
upfront and possibly share things on a more regular basis, it
would make your job easier?
Mr. Swingle. Regulatory certainty is absolutely critical
for utilities when we are making these significant investments.
Mr. Van Orden. Outstanding. Just to be clear, we have an
entire town. Every single well has been contaminated by PFAS
because there is an airfield right there on French Island,
actually. It is a township of Campbell. It is a beautiful
place.
Mr. Proctor.
Mr. Proctor. Well, PFAS is, obviously, a very complex
topic. But if I could address your question from the standpoint
of the private sector and the people that make the things that
are going to be necessary to help resolve the problem, I hear a
lot from--well, one thing that is certain----
Mr. Van Orden [interrupting]. Mr. Proctor, you have 17
seconds.
Mr. Proctor. I am sorry?
Mr. Van Orden. You have now 15 seconds.
Mr. Proctor. I am sorry. I still couldn't hear.
Mr. Van Orden. My time is expired. I yield back.
Mr. Proctor. OK.
Mr. Rouzer. Mr. Carter.
Mr. Carter of Louisiana. Thank you very much, Mr. Chairman.
As a former local and State elected official, I understand
the importance of intergovernmental coordination when it comes
to protecting precious resources, particularly in the event of
a disaster.
Right now, in my home State of Louisiana, we are facing the
impending crisis of saltwater intrusion currently creeping up
the Mississippi River. My office has been working in close
coordination with the Army Corps of Engineers, the State, and
the city of New Orleans, and the Sewerage and Water Board to
combat the saltwater intrusion.
What role do you see State and local government playing in
preparing for disaster events such as this that may threaten
drinking water and the water supply?
How can Federal agencies help their State and local
governments better prepare for these events?
Ms. Hammer, could you address that for us?
Ms. Hammer. Thanks for the question. I am actually not sure
I am positioned to answer that, as I don't work on disaster
preparedness and response issues.
Do any of the other witnesses?
Mr. Carter of Louisiana. Anybody else want to take a crack
at that?
Yes, sir, Mr. Proctor.
Mr. Proctor. Well, one thing I would note is the new BRIC
program that Congress created--I guess it was back in 2017--
provides some terrific opportunities for communities to access
funding to address predisaster mitigation, including things
like saltwater infiltration and that sort of thing. So, there
are programs out there available to communities.
But I think there have been some problems with rolling out
some of that BRIC funding over the past couple of years. And if
we could eliminate some of those obstacles, that would be
another source of resources for communities to address that
issue.
Mr. Carter of Louisiana. OK. On December 21, EPA announced
that they were providing $275 million in WIFIA grants to the
city of New Orleans and Sewerage and Water Board to modernize
the city's aging and storm-damaged water system. EPA's
financing of this project has historically helped protect
communities in historically underserved areas from the impact
of storm events and climate change.
How does WIFIA expanded eligibility help EPA supplement the
CWSRF program?
Mr. Swingle. Part of the testimony that I talked about was
a portfolio of funding approaches, and that is absolutely
critical. As our particular utility already has a WIFIA loan,
we are now in the process of our second. But for many smaller
utilities, WIFIA isn't the right solution. And that is where
SRF and WIFIA and the community appropriations all come into
play to create that portfolio.
As utilities, we are reflections of our community. And
often the differences in these funding approaches also
recognize that flexibility and add to each community being able
to access funding that is appropriate for their needs.
Mr. Carter of Louisiana. As our climate rapidly changes due
to global warming, drinking water increasingly becomes a more
precious natural resource. How do we see drought and arid
conditions affecting State and local water agencies?
Mr. Swingle. Well, as a State and local water agency, I
will address that. We are very proactive in our planning, both
for conservation and diversifying our supplies. Where we were
traditionally a groundwater-only entity, we are now
diversifying into surface water reservoirs. We are doing
extensive groundwater recharge to create future supplies. And
that is where also flexibility in the regulatory and funding
environment particularly comes into play for us, as local
utilities.
Mr. Carter of Louisiana. So, with the Clean Water State
Revolving Fund, how has BIL's investment into the program
helped improve clean water in the States?
Ms. Johnson. The investment through the Infrastructure
Investment and Jobs Act was a historic investment into the
Clean Water SRF programs. As I mentioned previously, with the
cuts to the regular program, it is really mitigating the
effects of those cuts at this point in time and putting a Band-
Aid on it, basically, for diverting those funds.
And so, in Oklahoma, we are a leveraged State. So, we issue
debt to make sure that we meet the capacity and the demand for
projects in our State. And so, in doing so, the more funds we
divert out as grants or loan forgiveness, the less loans that
we are able to make to be able to repay that debt.
Mr. Carter of Louisiana. And all of these critical issues
would be further exacerbated with a Government shutdown.
Voice. Yes.
Mr. Carter of Louisiana. My time is expired. I yield back.
Mr. Rouzer. Mr. Owens, you are recognized.
Mr. Owens. Thank you.
Mr. Proctor, you mentioned in your testimony that clean
water infrastructure requires innovation. In what ways do you
see the clean water industry looking to innovate?
Mr. Proctor. Well, one area is back to the topic of PFAS.
As I mentioned a second ago, that is a very complex topic, and
it is going to require a lot of innovation and a lot of new
technology from the private sector to be able to address that
topic.
One concern that many people in the private sector have is
that one of the remedies EPA is considering is to designate
PFAS a CERCLA constituent. We have a lot of concern about that
because that could potentially disincentivize the private
sector from getting involved in this topic. If there is a
prospect that they could get sucked into extensive and
expensive litigation and liability simply by providing some of
the solutions, that is a serious disincentive to going down
that path.
And so, as we start to look for the solutions for the PFAS
problem, we need to be mindful of unintended consequences.
Mr. Owens. Very good. Ms. Johnson, in your testimony, you
outline several Federal mandates that have made costs for clean
water projects too expensive, even with funding available. What
do you estimate the total extra cost of these mandates have
added to projects?
And would you agree that these added costs might stifle
innovation that Mr. Proctor just mentioned?
Ms. Johnson. So, it is very difficult to quantify the cost
of federalizing State programs, but there is a cost. Obviously,
it takes time and effort to document compliance with all of
these Federal requirements that may or may not be meeting the
intention of the congressional requirement. So, while we don't
have a statistical data for the actual true cost of the added
Federal mandates to the program, we do know that it does drive
infrastructure costs up.
Mr. Owens. OK. With these costs, do you believe there is
a--because we have chosen winners and losers when it comes to
receiving funds? And why, if that is the case.
Ms. Johnson. I am sorry, can you repeat that?
Mr. Owens. Do you believe, with the costs you are talking
about, does this preemptively choose losers and winners in the
industry you are part of?
Ms. Johnson. Yes, and increased costs of infrastructure is
going to trickle down to the ratepayers in your local
communities, especially in the disadvantaged communities where
their priority is keeping rates affordable for their fixed-
income homeowners.
Mr. Owens. OK. I am just--I will just say this. Thank you
for your innovation, because this is really what makes our
country what it is. And obviously, here in DC, they have no
clue what that looks like. So, I love the fact of innovation
being a topic. We just have to make sure to give you the
bandwidth to make sure that happens. So, thank you, and I will
yield back.
Ms. Johnson. Thank you.
Mr. Rouzer. Ms. Scholten.
Ms. Scholten. Thank you, Mr. Chair, and thank you so much
to all of our witnesses here today.
Congresswoman Hillary Scholten from Michigan's Third
Congressional District. I am proud to represent miles of
beautiful Lake Michigan shoreline, as well as the Grand River,
the largest river system in our State.
This topic today is so important to me for a number of
reasons. Water is a way of life in west Michigan and not only
for providing recreation. My family, we are year-round anglers,
but the Great Lakes watershed is a multibillion-dollar
industry. Keeping our water systems healthy and clean is a top
priority for me.
We have been talking a lot about PFAS contamination, which
is a huge problem. Michigan has been leading the way for
decades in identifying and remediating PFAS contamination sites
throughout our State. And Michigan's Third Congressional
District is no exception.
Mr. Swingle, I am wondering if you could talk a little bit
more specifically about some remediation efforts that you see
possible, and where we might be sort of losing the way in
addressing this deeply difficult issue. Specifically, how can
Congress help clean water agencies address PFAS remediation,
and what infrastructure do we need to prevent this sort of
contamination in the future? It feels like a problem that we
continue to throw more and more money at without really solving
the problem.
Mr. Swingle. Thank you. Yes, it really has to be a
multipronged approach because, as you are very well aware, as
public utilities, we are passive receivers of this pollution
that comes from a variety of sources.
As in my testimony, right now, understanding exactly where
these pollutants are coming from in our systems so that we can
target removal of those constituents upstream. It is always
more cost effective to remove at the source rather than when
you get to our systems and have the entirety of a flow from an
entire community.
So, as--one of the things that I did mention was ensuring
that that fix was in place to allow some of that mandatory
funding from IIJA to be accessible for that upfront assessment
and planning and pretreatment. That is absolutely critical.
The other is, because of the timelines associated with PFAS
regulation, is ensuring that we do have that regulatory
certainty. Utilities across the country will be investing
millions and millions, if not billions and billions, of
dollars. And ensuring that that infrastructure that we build,
that we have to make sure that we have in place, that it is
effective investments. And again, ultimately, that we are not
also responsible for the liability associated with the pass-
through of those discharges.
But we do face many technology challenges right now. Our
systems at that scale right now are not equipped to cost-
effectively handle PFAS. And so, there is significant research
and development on the technology side that is required, as
well.
Ms. Scholten. Thank you. That was really informative.
In the rest of my time, Mr. Proctor, I want to move on to
you with a question. I am very receptive to the need to
potentially extend some of these deadlines for the Bipartisan
Infrastructure Law, and you talk about the need for additional
technical assistance. Can you speak a little bit more
specifically about what kind of technical assistance is needed,
how it would be used, and how it would help?
Mr. Proctor. Well, the process for applying for SRF loans
and grants can be very arcane sometimes, and complex. And
typically, the utilities that need that assistance the most are
the most ill-equipped and lack the expertise to be able to
figure out that process. And that is where technical assistance
becomes critical. Providing them the resources, the information
that they need to be able to take advantage of the funding is a
very, very important part of making sure that that money gets
where it needs to go.
Going back to something I said in my opening comments, the
lower the appropriations for the regular allocations to the
SRFs, the less technical assistance is going to be available
for those disadvantaged communities. And so, I would just
reiterate my plea that you all work with the folks over on the
appropriations side to make sure that that money gets there.
Ms. Scholten. Thank you. My time is up. I yield back.
Thank you all.
Mr. Rouzer. The gentlelady yields back. Mr. Collins, you
are recognized for 5 minutes.
Mr. Collins. Thank you, Mr. Chairman. I would like to start
off by telling people this is kind of my industry sitting in
here, because I am in the transportation--I am in the trucking
business. And so, a lot of times I like to focus kind of on
what I know a little bit about.
And so, I want to kind of go into the supply chain issues a
little bit. It is obvious that up here, as much as--this
Congress, any time you say ``supply chain,'' heads turn. So, it
has been, especially since the pandemic, in the forefront of
people's minds, whether they are service providers or
manufacturers.
And Mr. Proctor, as a manufacturer, I would love to know
how you have been impacted by these supply chain disruptions.
Mr. Proctor. Fairly severely on a number of different
fronts.
We make ductile iron pipe, ductile iron valves, fittings,
that sort of thing. And to give you one example, the war in
Ukraine has had a significant impact on our ability to
manufacture those products. Russia and Ukraine are the largest,
not the sole sources, of magnesium, which is a critical element
to the manufacture of those products. And so, the war over
there has disrupted our supply chain significantly when it
comes to those basic raw materials.
But the other thing that I want to emphasize is workforce
development. When we talk about supply chains, we need to keep
in mind the people that actually do the work that produces
these products. We need more people who are willing to come in
and help us provide those services, and that is a real
challenge for us.
And so, as you are thinking about things that could be done
to not only improve supply chain issues but also the operation
of the utilities themselves, please keep in mind that workforce
development and training good folks who want to come in and
work for what is really one of the last opportunities for
someone without a college education to make a good, solid
middle-class wage.
Mr. Collins. I couldn't agree with you any more. Usually
behind supply chain issues is workforce. We always end up
talking about workforce. As a matter of fact, we were just
talking about it at a meeting I had this morning at 8 o'clock.
And you are exactly right.
I also sit on the Committee on Natural Resources. And when
you were talking about critical minerals and the fact that we
are 80 percent dependent on China to process the critical
minerals that we need here in this country, and then you factor
in the fact that we have an administration that has continually
not allowed mining in our own country, much less processing,
because we are down to three smelters, so, I think that is a
very important point, that we move our mineral mining
processing right back to the United States, and get away from
this dependence on some of these countries.
Mr. Proctor. Well, if I could echo that, our products are
made from 95 percent recycled content, which means iron and
steel scrap. But the global demand for scrap is such now that
it is getting increasingly difficult to find scrap that can go
into our processes.
What that means is at some point in time, we are going to
have to look to developing iron and steel from mining and
refining and other activities like that. And so, that's a
future issue that is going to become more acute as the years go
by.
Mr. Collins. Well, I've got one more question for you. I
know I am getting limited here, but so, there has obviously
been an impact on the construction and completion of the
projects that you are supplying for, correct?
Mr. Proctor. Yes.
Mr. Collins. All right. Besides workforce development, is
there anything else that Congress can be doing? Permitting or
anything in that area?
Mr. Proctor. Absolutely, and I will give you one specific
example.
EPA is currently considering a discretionary review of the
PM2.5 rules. If they ratchet down the
PM2.5 requirements beyond where they are now, it is
going to put almost the entire country in a nonattainment
situation. And that means projects that would expand capacity
and increase jobs and increase the ability of the manufacturing
sector to meet the demand for the sort of products that we are
going to need to build all these projects, it is going to be
virtually impossible.
We all want clean air, don't get me wrong. But if you look
at the statistics, our air now is the cleanest it has been in
40 years, and it is the cleanest in the world in many respects.
So, let's make certain that, as we are looking at these new
regulations and changes, that we keep in mind, once again, the
unintended consequences.
Mr. Collins. Yes, sir, something I like to call common
sense.
Thank you, Mr. Chairman. I know I am out of time. Thank
you.
Mr. Rouzer. Mrs. Sykes.
Mrs. Sykes. Thank you, Mr. Chair. Thank you, Ranking
Member, for this. And to our witnesses, welcome, and I
appreciate your testimony.
One thing that has become very clear is how important the
Bipartisan Infrastructure Law is nationwide, not just in my
community in Ohio's 13th Congressional District.
And you have talked about how the Clean Water State
Revolving Fund especially is important. And having been a
State-level legislator, I have talked about this quite a bit.
And so, it is good to see the synergy--or lack of synergy,
sometimes--between how these programs work.
Mr. Swingle, I want to ask you briefly, in your testimony,
you mentioned the current investments in the Clean Water State
Revolving Fund proposed in the House's budget are not adequate.
Can you talk about why this proposed funding does not meet the
needs of our communities, and what would happen if we funded
the Clean Water State Revolving Fund at the proposed fiscal
year 2024 levels?
Mr. Swingle. Thank you, yes. We have talked about funding
or cost increases that are driven by both the regulatory
environment and the inflationary environment, and so, as we get
to this discussion where there is a reduction in either the
Clean Water SRF or just funding in general, that gap has to be
widening.
And we know the importance of clean water. And when that
funding gap exists, there are going to be reductions in--
whether it is compliance or the ability to meet the needs of
the communities.
Mrs. Sykes. Thank you for that answer.
So, it is clear we need to hold up the spirit of the
Bipartisan Infrastructure Law and keep investing in those
critical programs, not just for my district but across the
country, and including in your community. It is why I was proud
to lead a letter with Ranking Member Napolitano to the
Appropriations Committee, speaking of that, with 30 of my
colleagues earlier this year requesting robust funding for
those water infrastructure programs, and also why
Representative Nikema Williams of Georgia and I introduced a
bill to ensure funding for environmentally friendly water
infrastructure projects.
Working with organizations like the American Rivers to
advance bills like the WISE Act would ensure longevity of our
infrastructure and the environment and protect these programs
to come. So, Mr. Chairman, at this time, I request unanimous
consent to submit a report by American Rivers on the Clean
Water State Revolving Fund for the record.
Mr. Rouzer. Without objection.
[The information follows:]

Report, ``Using Clean Water State Revolving Funds for Greening and
Climate Resilience: A Guide for Local Governments,'' by American
Rivers, January 2023, Submitted for the Record by Hon. Emilia Strong
Sykes
[The 15-page report is retained in committee files and is available
online at https://www.americanrivers.org/wp-content/uploads/2023/02/
CWSRF-Guide-for-Municipalities.pdf.]

Mrs. Sykes. Thank you, Mr. Chairman.
Ms. Hammer, I want to turn to you now. I was drawn to a
comment in your testimony and was hoping that you could discuss
a little bit further about water affordability and cost. We are
all concerned about it. I hear my community members talk about
inflation and water. Obviously, affordability is rising to the
surface, especially post-pandemic. Most people were not aware
that there was such a thing called water shutoffs, and people's
water would be shut off for lack of payment.
The Low-Income Household Water Assistance Program is
vitally important, and you make a suggestion to make this
permanent. Can you talk a bit more about that?
And I will just say that this program has helped about
25,000 Ohio households make ends meet, protecting their quality
of life and safety. So, why would you suggest that we make this
pilot program permanent?
Ms. Hammer. Thanks. I really appreciate that question.
As I had discussed in my written testimony, there truly is
an affordability crisis in this country. Some recent studies
have found that anywhere between around 10 to 20 percent of
households are experiencing affordability challenges with water
and sewer bills. Most utilities do not operate their own low-
income assistance programs. In many cases, State law can be a
barrier to those, or they simply don't have the resources.
And as you mentioned, the LIHWAP program that was adopted
during the pandemic has made a huge difference for many, many
people. It has helped over 1 million households nationwide
maintain access to water or sewer service. But of course, it
was established as a temporary program, and it is currently
about to expire, yet the need is not going away.
So, we need to address it through the adoption of a
permanent program, whether that is LIHWAP made permanent or a
program at a different agency. We are pretty open to the
different options, but any permanent program that makes
households automatically eligible for participation if they are
already participating in another Federal income-qualified
assistance program, that would really boost participation.
Right now there have been a number of barriers to enrollment
that have reduced participation rates.
Mrs. Sykes. Thank you so much. And my final question I want
to direct to Ms. Johnson.
In your testimony, you mentioned, in relation to compliance
with the Davis-Bacon Act, that you did not find that there was
an issue, it ``isn't an issue.'' This morning, the
International Union of Operating Engineers submitted a letter
to members of the committee--or shared, I would say--and they
identified that there, in fact, is an issue, at least according
to their assertion. Over 10,000 workers, upwards of $30 million
in wages, have not been appropriately disbursed. What is your
response to that?
Ms. Johnson. So, from my experience with the Davis-Bacon
wage rate act is the issue is more of the compliance
procedures, not necessarily the wage rates, especially in
today's tight labor markets, where contractors are having to
pay above and beyond the wage rates to attract skilled workers.
The actual wage rates are not the issue, but it is actually the
burdensome administrative oversight of the act.
Mrs. Sykes. Thank you.
Mr. Chair, I tried to be under my 5 minutes so I could get
cheered on, too, but I apologize. I yield back.
Mr. Rouzer. That is all right.
Mr. Collins--I mean, Mr. Ezell. My apologies.
Mr. Ezell. No problem. We do kind of talk alike, so, we are
from the same area of this country.
Mr. Rouzer. You two are sitting down there beside each
other.
Mr. Ezell. That is right. So, I want to thank all of you
for coming today. I know it is a lot going on right now, but I
just thank you all for being here today. And Mr. Chairman,
thank you for the opportunity.
Mr. Proctor, in previous hearings, I have raised some
similar concerns that you highlighted in your testimony. I
agree we cannot allow these issues to hinder the improvement of
critical water systems in Mississippi and across our Nation.
One of the issues that both you and I have emphasized is the
infrastructure funding passed by Congress and the impending
deadlines.
As you noted, EPA has not yet recommended water quality
criteria or issued effluent limitations guidelines for PFAS. I
understand there is a lack of testing capacity for PFAS, and
particularly in rural States. How does this affect the States'
ability to meet the deadlines placed on these funds?
Mr. Proctor. Well, in the absence of certainty about what
targets they are going to have to meet from a regulatory
standpoint, as I mentioned earlier, it makes it very difficult
to figure out how to design the projects, what technology you
need, what systems you need, and that sort of thing. And so,
the longer that clarity doesn't occur, the more utilities are
going to start bumping up against these deadlines.
And you know, again, one of the concerns that we have from
the standpoint of the people that are going to provide the
products that go into that is, if we get up against those
deadlines and all of a sudden there is a massive surge in
demand, that could create bottlenecks that could increase cost
to the projects and potentially put the project itself at risk.
Mr. Ezell. Thank you. What factors would you recommend for
the EPA to consider when planning on requiring testing for
PFAS?
Mr. Proctor. I am sorry.
Mr. Ezell. What would these factors--what would you
recommend for the EPA to consider when planning on requiring
testing for PFAS?
Mr. Proctor. Well, I don't really have an opinion on what
the standards ought to be. But as I said earlier, it is a very
complex topic, and it is something that is going to require a
lot of private-sector participation to evaluate those
standards.
Mr. Ezell. All right, thank you. I want to move on.
Ms. Johnson, EPA recommends that States utilize the full
Drinking Water State Revolving Fund 2 percent small system
technical assistance set-aside and the newly available Clean
Water State Revolving Fund 2 percent technical assistance funds
to enhance or build programs that proactively identify, engage
with, and provide assistance to rural, small, and Tribal
publicly owned treatment works and drinking water systems,
particularly in disadvantaged communities. Have you benefited
from these technical assistance dollars?
Ms. Johnson. So, the requirement in the Clean Water SRF
programs is that the 2 percent technical assistance, if
utilized, has to be utilized to State agencies or nonprofit
entities, while in the Drinking Water SRF program, it also
allows contracting with private firms and entities to
distribute that technical assistance.
So, many States around the country, under the Clean Water
SRF programs, have technical assistance programs outside of the
2 percent technical assistance that they have been
administering for many years through their administrative fees
that they charge on the loans to help their borrowers.
Mr. Ezell. Thank you. And you know, everybody in here wants
clean water. We all do that. And we want to do whatever we can
as a Congress to help you and to help us move along. But
sometimes we've just got to get through some of this redtape to
help these smaller communities like places in my home State.
So, thank you, Mr. Chairman. I yield back.
Mr. Rouzer. The gentleman yields back.
Ms. Hoyle.
Ms. Hoyle of Oregon. Thank you, Mr. Chair. I would like to
make a comment, as opposed to a question.
I have heard through testimony--your testimony, Ms.
Johnson, and some of my colleagues'--where you talk about
Federal regulation increasing costs. And I think it is really
important to be transparent that I believe what you are
referring to is Davis-Bacon prevailing wage, among other
things. And so, I just think it is important that we take a
step back as to why we have prevailing wage for projects built
with Federal dollars.
In 1931, the Davis-Bacon Act was passed, and this was a way
to ensure that when we use taxpayer dollars, that those dollars
were spent for the highest quality work. Because this--we are
building things that we want to last for generations. And so,
what we don't want is for sub-par contractors--and as labor
commissioner, I worked with business, I worked with labor, and
the vast majority of businesses do want to do the right thing,
the vast majority of contractors. However, there are people
that don't.
And so, if we allow in Federal projects--and in Oregon on
projects that use State dollars--to bid just on price, then
what happens is you get low-bid contractors and bad things
happen. More workers die. Those projects don't last. Buildings
cave in. It is unsafe.
Now, I personally, having run an agency that had been not
invested in in four decades prior to my coming in, I am
actually very passionate about streamlining Government
bureaucracy, about making sure that we are not being
duplicative, making sure that people can understand Government,
that--again, that we have our Federal employees at the
Department of Labor or wherever else having the resources,
meaning that they have IT resources, that they have enough
people to do the job, that our businesses and our workers can
access Government easily. That may be an odd thing to be
passionate about, but we have all been stuck in places. And I
can tell you, I talk to Federal employees all the time that are
frustrated that they don't have the tools to actually directly
do what we need to do.
Now, the Biden administration has a final rule that will go
into effect next month to ease the compliance burden and reduce
some of the duplicative, overly technical nature of complying
with the Davis-Bacon laws. And that is important. But what we
don't need to do--because I would disagree that we don't need
Davis-Bacon anymore because everybody is just going to pay the
right wage. Again, coming from a State with little Davis-Bacon
and enforcing wage and hour laws, routinely when we would come
in and find that there was egregious wage theft on a
construction site too often, so often, we would have workers
from States that had right-to-work-for-less laws that didn't
understand that they needed to be paid a prevailing wage. So,
workers do need protections, not because of the vast majority
of contractors, but because there are people that would take
advantage of the law.
But we also aren't going to always have a strong economy
like the kind of economy where you can't find workers, right?
The prevailing wage laws means that the best contractors that
have really strong apprenticeship programs, that invest in
their workforce safety, that they get to compete and that our
local contractors get to compete instead of having a national
low-bid contractor come in.
So, I agree that we need to reduce the regulatory burden,
but in doing that, we should not undermine the protections that
Davis-Bacon offers to our taxpayers so that we can get the best
value for our taxpayer dollars, the protections that prevailing
wage offers to workers, and the benefit that we give to level
the playing field for those contractors that will pay more and
do better. Because we deserve to have the absolute best bang
for the buck with our Federal dollars.
So, I just wanted to point that out. I really don't have a
question, but I want to--I am happy to work with you on the
streamlining piece, but also, we have to invest in the agencies
we want to do the job. Because if you don't have enough people,
and you don't have the right resources, and you don't have--you
are still working on a COBOL system, it is impossible--it is
impossible--to achieve the things we want to achieve. So, it is
a both/and.
Thank you very much.
Mr. Rouzer. The gentlelady yields back. Mr. Duarte.
Ms. Hoyle of Oregon. I yield back.
Mr. Duarte. Thank you, Mr. Chairman. It is great to be here
today. I have been waiting for this committee hearing. Thank
you.
I represent a community in California's Central Valley that
has a lot of small farm towns with great needs for, of course,
California compliance standards on wastewater and drinking
water, very, very high, and many of these towns don't have a
lot of new growth to put the cost of a new treatment plant onto
developer fees. So, they have got very few options, very small
tax base. And many of these farmworker towns, this is a Voting
Rights Act district with two-thirds Hispanic voters. And so, it
is my pride to represent them, but nonetheless, we have some
challenges.
So, Ms. Johnson, Mr. Swingle, it sounds like you have got
quite a bit of experience with the proverbial honeypots of
funding for clean water projects and sewer and wastewater
projects. And I would just like you to survey for me really
quick what you think--we spoke to some specific programs today,
but where you think some of the different Government sources of
funding are for these types of projects in smaller rural towns.
Ms. Johnson. So, I am not sure I completely understand the
question.
Mr. Duarte. How do I--aside from the grants we are talking
about today specifically, what are the different grant programs
and funding sources within the Federal Government for clean
water and wastewater treatment, particularly in smaller rural
towns?
Ms. Johnson. OK. Besides the Clean Water SRF program, I am
aware of some other smaller grant programs, the Sewer Overflow
and Stormwater Reuse Municipal Grant program, often referred to
as OSG Grant program. And I believe there are other programs at
other Federal agencies. Rural development has CDBG grants and
other grant programs.
I am not sure of all of the funding programs out there. I
know the Indian Health Service offers grant programs to small
communities within their Indian nations.
Mr. Duarte. OK, Mr. Swingle, you are reaching for it.
Mr. Swingle. Well, and I would just like to add that I
think it is complicated. We have talked about the largest ones
today, and that is evident. But there are others, and we would
be happy to follow up and provide what we have as far as an
inventory.
But I think that is also the complexity of ensuring that
these other programs that are in place, that they are
accessible, and that they truly do meet the needs, which right
now, based on the testimony you have heard from throughout this
panel, is that the growing needs across the water sector just
aren't being met.
Mr. Duarte. Thank you very much. In terms of Federal
resources, I also understand that the Clean Water Act has a
block grant program that goes to each State individually,
annually. I know that--I understand that California's is over
$300 million.
Are you familiar with these moneys and how they are used in
your States?
And how would I go about comparing that to what is
happening in California?
I just have a feeling they are not getting to clean water
programs as I would define them.
Ms. Johnson. Yes, I would encourage you to reach out to
your States, for sure, on what all funding sources are
available to the communities within your States.
In Oklahoma, we work collaboratively with other funding
agencies in our State to maximize the resources available to
our communities within Oklahoma so that they have every
opportunity to get either grant or loan funding for their
critical infrastructure needs, based on their situation. And I
know many other States have similar programs.
Mr. Duarte. Yes, thank you.
Yes, sir, Mr. Proctor.
Mr. Proctor. As we talk about available resources, one of
the things that we shouldn't forget is the opportunity for
public-private partnerships. If we could expand the use of
those partnerships, that gives us the ability to tap into
private-sector funding to alleviate a lot of these problems, as
well as whatever may be available from the Federal Government.
Mr. Duarte. Thank you.
And Ms. Hammer, you are with the NRDC, an environmental
activist group--advocacy group, let's call it. The San Joaquin
Delta of California has 60 municipalities releasing not
tertiary-treated discharge into the delta, causing algal blooms
and other environmental problems. Is this on your radar, and is
your group pressuring for some kind of remedy here?
Ms. Hammer. I am not sure. We have an office in San
Francisco that I believe handles California-specific issues,
so, I would be happy to consult with them and get back to you.
Mr. Duarte. I would really appreciate that.
Ms. Hammer. Sure thing.
Mr. Duarte. Thank you to the chair, and I will yield back.
Mr. Rouzer. The gentleman yields back. Ms. Norton.
Ms. Norton. Thank you, Mr. Chairman.
Ms. Hammer, the District of Columbia, like States, has
benefited greatly from the Bipartisan Infrastructure Law and
clean water infrastructure State revolving funds. You mentioned
that the increased frequency of storms caused by climate change
is leading to higher pollution in our Nation's waterways, and
thus, increased treatment costs for two-thirds of our country's
drinking water. The District of Columbia, which I represent, is
one such jurisdiction, and DC is wholly reliant on the Potomac
River for our drinking water, meaning DC's drinking water is
continuously at risk.
How can greater transparency in clean water infrastructure
financing increase equity for historically marginalized and
underserved communities, particularly communities of color that
are impacted disproportionately by pollution?
Ms. Hammer. Thanks for that question. So, we, NRDC,
recently conducted a study looking at the past 10 years of
funding decisions under the Clean Water State Revolving Fund
program.
First of all, I would say that transparency is a challenge
with the data through that program. It is very difficult to
access project-level information in terms of who is receiving
funds. So, that was the reason for my recommendation for a
public online dashboard that EPA could manage.
But the study that we did found that smaller communities
and communities with higher populations of color were
statistically less likely to receive Clean Water SRF awards
during that 10-year period. So, it is really important for
State SRF program managers to keep that in mind, to assess what
are the barriers to participation in the program, are there
policies in place that may be blocking certain communities from
accessing funds.
Ms. Norton. Thank you, Ms. Hammer. You also mentioned that
urban flooding currently results in $9 billion in damages each
year. What are the benefits of dedicated climate resilience
funding for wastewater and stormwater infrastructure in flood-
prone areas, and how do the costs compare?
Ms. Hammer. Well, wastewater and stormwater infrastructure
are facing a wide range of threats from climate change.
Flooding is certainly one, sea level rise is another. Many
wastewater facilities are located right on waterways.
And the--one of the best approaches there is--just more
funding is needed, in general, to help utilities manage those
threats. The more dedicated funding we can provide to
sustainable green infrastructure, the better. Those approaches
are really adaptable, flexible. They can be scaled up or down.
Unlike hard infrastructure, they can be scaled easily and
quickly. They provide multiple benefits to communities such as
reducing the urban heat island effect and others.
So, we would support dedicated funding, particularly
through the continued existence of the Green Project Reserve.
Ms. Norton. Mr. Swingle, you said that there are currently
no available technologies that both effectively and affordably
destroy PFAS in drinking water at the scale necessary for
public water utilities. How can Congress aid with developing
these necessary technologies and ensuring that public clean
water utilities can afford them?
Mr. Swingle. That exists on both the clean water and the
drinking water side, where there is a need for additional
research. And tying into--this is a place where I do very much
agree with the private sector to make sure that we have got
those private-sector partnerships on developing and deploying
and validating technologies that can be produced at scale.
Because while the technologies are there, they are often not
affordable at the scale when we are talking communitywide
systems.
Ms. Norton. Thank you. I yield back, Mr. Chairman.
Mr. Rouzer. The gentlelady yields back. Mr. James, you are
recognized.
Mr. James. Thank you, Mr. Chairman. I would like to thank
the chair for this opportunity to speak, and I would like to
thank the witnesses for being able to make it up to Capitol
Hill today and testify in front of this committee regarding the
state of clean water infrastructure.
Throughout my service, I recognize that we all have a great
duty not just to our servicemembers and veterans, but right
here, starting in the District of Columbia, representing the
folks in our district--me, back in the 10th Congressional
District in Michigan. And part of that is making sure that we
have the very basic needs met, clean drinking water.
I have heard a number of great conversations here today,
but I would like to piggyback on my colleague's last statements
specifically related to rain and stormwater.
Two-inch-plus rain events have steadily increased in
frequency since 1964. Specifically, there was an 89-percent
increase for the State of Michigan 1964-2013, a 128-percent
increase for southeast Michigan. Specifically, for whomever can
answer, what types of wastewater treatment projects at
wastewater treatment facilities are eligible for CWSRF emerging
contaminants funding?
Any ideas?
Ms. Johnson. I can try to address that. The CWSRF emerging
contaminant funding is a very narrow eligibility under the
CWSRF program, but has specific funding through the
Infrastructure Investments and Jobs Act. The guidance for that
funding was delayed in coming out, and so, State SRF programs
are trying to understand the particulars with administering
those funds currently. They are quite prescriptive, from what
we have been told, and that the CWSRF programs cannot use the
funding for monitoring to detect emerging contaminants. And so,
an emerging contaminant would have had to have been previously
detected in order to use those funds. And without those being
regulated contaminants, a lot of especially small communities
are not actively testing for those contaminants.
Additionally, the CWSRF emerging contaminant funding is not
allowed to be used for detecting the source of contamination.
So, once identified, they can't use the funds to figure out
where it is coming from. So, the Clean Water SRF----
Mr. James [interrupting]. That is interesting, Ms. Johnson.
I am going to have to look into that. Thank you.
Ms. Johnson. Thank you.
Mr. James. One more quick question in the limited time that
we have. After speaking with my colleague and former
Representative, Candice Miller, discussing combined sewerage
overflow projects in order to fully protect Michiganders from
increasingly devastating floods, we have determined that nearly
$181 million in design and construction will be needed to
protect our homes. This includes nearly $70 million for the
Nine Mile emergency bypass rehabilitation, $22 million for
electrical system replacements, and nearly $30 million for
canal rehabilitation in our district alone.
In 1\1/2\ minutes, anybody who can answer, what kinds of
planning and assessment activities are eligible for the CWSRF
as we examine this moving forward?
Ms. Johnson. The CWSRF programs can fund a wide range of
planning activities. Some of the problems with using those
funding sources for planning activities is the Federal
procurement requirements for engineering services. Oftentimes
the State and Federal requirements for procuring those services
contradict each other. And so, compliance with procuring
services in a State doesn't always meet the Federal
requirements, so, they use funding sources outside the CWSRF to
utilize for their planning efforts.
Mr. James. Thank you very much. I know the chairman shares
my passion for regulatory reform and streamlining. So, I am
excited to work with the chairman and my colleagues on that.
With that, sir, thank you. I yield back.
Mr. Rouzer. Mr. Moulton.
Mr. Moulton. Thank you, Mr. Chairman. When you drive up to
my hometown from Boston, you go along this beautiful beach
right between Lynn and Swampscott. It is called King's Beach,
literally fit for a king, and yet it is closed 90 percent of
the time. It is the most polluted beach in Massachusetts. Now,
Lynn is a majority minority community, and you will often see
families out there, even when the beach is closed, because it
is the only beach they have access to at all. So, it is a major
issue for the community.
The problem is that, with most of the clean water funding
available through the Bipartisan Infrastructure Law and other
legislative vehicles only available as loans, many local
governments just don't have the tax base large enough to pay
them back. And Massachusetts doesn't have a county system
anymore, so, it is hard to coordinate different cities and
towns working together, although Lynn and Swampscott are moving
in that direction.
So, Mr. Swingle, what should we be doing to support a more
regional approach to water quality issues like those that are
plaguing King's Beach?
And what mechanism would you suggest we use when our
current system is so segmented?
Mr. Swingle. Across the water sector, I think part of this
is ensuring that we have organizations and use organizations
like NACWA for best practice sharing. We have many large
utilities across the country that do have expertise and
capabilities.
And in my State, in Florida, through our association, which
is the Florida Water Environment Association Utility Council,
we do a lot to help and provide that resourcing in terms of
just assistance and consultation for smaller utilities. So, I
think that is very important, on State levels, is utilities
helping utilities and working together and creating
partnerships with the regulatory environment.
The second piece that I emphasize that remains absolutely
critical is that diversity of funding approaches. I don't
believe that there is any singular funding approach that will
work for everyone. And so, having funding approaches that make
sense for the different communities that we serve and their
differences is absolutely critical in order to be successful to
address the situations that are----
Mr. Moulton [interrupting]. Ms. Hammer, I want to ask about
this, specifically. Picking up on where Mr. Swingle left off,
what should we be doing to ensure that Federal infrastructure
funding is accessible for environmental justice communities
like Lynn in the amount required to make a difference?
Ms. Hammer. Thanks. As we have discussed a few times today,
it is extremely important that funding continue to be available
in the form of additional subsidization grants and principal
forgiveness that doesn't have to be repaid, which is the only
option for many communities that can't afford a loan.
Technical assistance is also incredibly important. A number
of communities don't have the on-staff resources to navigate
the process. Preparing an application for SRF assistance can
cost tens of thousands of dollars. So, the more technical
assistance resources that we can provide to EPA, to other
providers, would make a huge difference.
Mr. Moulton. So, we also in Massachusetts have a big issue
with combined sewerage overflows. We have heard that brought up
by several of my colleagues today already.
North of King's Beach is the Merrimack River, and I have
got six towns in my district that the Merrimack River flows
through. And as we are having more frequent bad rainstorms with
climate change, there are a lot more CSO events, and it is a
real problem. And a lot of the upriver towns that are not
necessarily in my district but contribute to the problem here
just don't have the money to upgrade their sewerage systems to
handle this.
So, Ms. Hammer, I am glad to see that the Bipartisan
Infrastructure Law authorizes a program specific to combined
sewerage overflow issues, but can you comment on how that
program works and how it could help my district and other
districts upstream on the Merrimack River?
Ms. Hammer. We were also really glad to see that program
get included. It has taken a really long time to get it up and
running.
Mr. Moulton. Why has it taken so long to get it up and
running?
Ms. Hammer. I am not entirely sure. I know that the amount
of funding that was appropriated for it was a lot less than was
authorized. So, getting that appropriation level up would be
helpful, but just administrative delays----
Mr. Moulton [interrupting]. Are there ways that we should
expand the program, as well?
Ms. Hammer. Sorry?
Mr. Moulton. Are there ways we should expand the program,
as well?
Ms. Hammer. Expand the program? I don't have any specific
recommendations on that right now, other than increased
appropriations.
Mr. Moulton. All right. Thank you, Mr. Chairman. I yield
back.
Mr. Rouzer. The gentleman yields back. Mr. Westerman.
Mr. Westerman. Thank you, Chairman Rouzer and Ranking
Member Napolitano. These hearings are obviously very important
as you work towards keeping that record going on getting a WRDA
bill done, and I look forward to being part of that. Thank you
to the witnesses for being here today.
Ms. Johnson, I come from your neighboring State of
Arkansas. I represent a rural district. The areas in Arkansas
are much like the areas in Oklahoma. And I wanted to ask you
your thoughts on how the current structure of the Clean Water
SRF better serves rural areas like ours as opposed to some kind
of federally mandated system.
Ms. Johnson. Thank you for the question. Yes, Oklahoma is a
very rural State, and we have been funding projects in rural
Oklahoma for the past 30 years, not just with the recent
attention on small, disadvantaged communities. Those
communities are the backbone of rural States across the Nation
and definitely are in need of funding.
The Clean Water Act already authorizes the SRF programs to
utilize 10 percent of the funding for additional subsidization.
And with a maximum of 30 percent, the additional in the
appropriations bill is generally duplicative, but States
already have the authority to do that. And it is a State issue,
and States understand the affordability challenges within their
States and know where to direct those fundings to.
One thing I will say about small, rural communities is that
they are resilient. But their priorities are different than the
larger communities. While larger communities have processes in
place for fiscal sustainability, small communities are trying
to maintain compliance and not raise their rates for their
households within their communities. And so, it is a challenge
for those communities.
But increasing grant programs through the SRF program,
while it is great for the recipients of those grants, it
increases the cost to small or disadvantaged communities that
didn't get a grant by having to raise our interest rates
because of the lack of loans coming back into the program
because it is going out as grant funding.
Mr. Westerman. Thank you. And one of the suggestions you
made for streamlining compliance really caught my attention. I
just want to read this. It is your first bullet point in your
testimony on suggestions. It says to, ``Modernize the contract
threshold and index the threshold to inflation: Davis-Bacon
applies to water infrastructure projects that cost more than
$2,000, a threshold that hasn't been updated since the law was
enacted in 1931.'' You said, ``For context, the average cost of
a water infrastructure project in a small community (fewer than
10,000 people) was $1.8 million in 2022.''
I first learned about this by working with the folks at the
Corps of Engineers on the MKARNS, and I was shocked when I
found out that to change the tires on a backhoe, you had to put
out a formal bid. And something that would cost maybe $2,500,
you end up literally spending $15,000, and most of that is
paperwork. The cost for the tires on the backhoe is the same
that it would be if you just went and got new tires on your
backhoe.
So, in further investigation on this, between 2018 and
2020, just in the Little Rock and Tulsa Districts, had this
threshold been adjusted for inflation, which it was $2,031, I
think it would have been $36,000 at that point and $40,000 or
more now--it would have saved $18 million over a 2-year period.
Can you speak to that more, and talk about how--and the
reason--I tried to put this in WRDA last time, and it got
rejected because people thought it was going to affect Davis-
Bacon. This has nothing to do with the wage rates. It has to do
with raising the limit that you can purchase without having to
go through a formal bidding process.
Ms. Johnson. Yes, there is definitely a need for
modernizing the compliance procedures for not only Davis-Bacon,
but other Federal requirements. Like you said, it's not about
the wages. It's about compliance of these requirements.
In Oklahoma, we had a community that had to turn back
Federal funding because, literally, the project covered two
different wage rate areas. So, while they were working on one
side of the street, they had to be in compliance with one wage
rate, and while on the other side of the street, they had to be
in compliance with a separate wage rate. So, this is a mid-
sized community that had sophisticated processes for compliance
and still wasn't able to get it right.
So, as we have mentioned several times today, it really
needs to be streamlined and modernized.
Mr. Westerman. Thank you, and I yield back.
Mr. Rouzer. Mr. Garamendi.
Mr. Garamendi. Thank you, Mr. Chairman. This is a rather
important hearing, considering where the appropriation process
is going. We ought to be pretty much aware that this is likely
to be ``pie in the sky/dream on'' if the appropriations that
are proposed by my colleagues on the Republican side actually
happen. So, let's dream on for a few moments. We have got some
dreams that we would like to put forward.
This question is for you, Mr. Proctor. This past January, I
reintroduced my bipartisan Clean Water State Revolving Fund
Parity Act with Congressman Bost of Illinois. This would expand
eligibility for the U.S. EPA Clean Water State Revolving Fund
program to privately owned wastewater treatment systems, but
only to that portion of money that we would hope would be
allocated in the future over and above the present $1.63
billion fund.
So, Mr. Proctor, do you agree--I hope--that Congress should
also provide low-cost Federal financing loans that would be
repaid with interest to help modernize the wastewater treatment
systems for those millions of Americans that rely upon
privately owned systems?
Mr. Proctor. I do. I think there are somewhere around
35,000 water systems across the country, 85 percent of which
serve fewer than 10,000 people. And they simply lack the
resources to be able to take care of all the needs for their
customers.
And one of the things that could alleviate that concern
would be allowing public-private partnerships, allowing private
entities to come in and access some of that funding to provide
additional resources.
And not only that, regionalization, which I think is sort
of related to what your bill addresses, is a way to increase
scale that would provide and bring more resources to solve the
problem, as well.
One other thing that I would mention is, of those 10,000--
or of those smaller utilities that are out there, many of them
are in noncompliance because they do lack the expertise and
resources. But there is a poison pill out there that prevents
the private sector from coming in to provide assistance, and
that is that if a private-sector entity, or, for that matter, a
public-sector entity, comes in and takes over or assists with
the operation of that utility, they could incur whatever past
liabilities, penalties, whatever may have accrued from past
sins.
Mr. Garamendi. [Inaudible.]
Mr. Proctor. So, providing some form of safe harbor for
larger utilities that come in in a Good Samaritan role to help
these smaller utilities would eliminate that as an obstacle.
Mr. Garamendi. Additional work to be done, for sure, and we
will pick that up.
The bill that we are proposing, we would hope it would be
included in the markup from this House's WRDA bill so that we
can then negotiate with the Senate, which is always a good
idea.
This next question goes to you, Ms. Johnson. The Council of
Infrastructure Financing Authorities has yet to chime in on
this brilliant piece of legislation that Mr. Bost and I are
putting forward. Would you like to opine today on your position
in support of, hopefully, this legislation?
Yes, indeed, I am trying to set up a system in which this
might be included in a bill that we might take up in markup.
Ms. Johnson. Yes, CIFA does not oppose the expansion of the
Clean Water SRF-eligible entities, to include private.
Ultimately, States will have to make the decisions on if they
fund to public or private entities.
Mr. Garamendi. Yes, if they have the opportunity.
Ms. Johnson. Yes.
Mr. Garamendi. And once again, this would be money over and
above the present level of appropriations. So, it would be the
additional money which we would hope would be included. But
right now, it appears as though we are going in the opposite
direction.
This next question goes to--well, I will put the question
out there, and Mr. Swingle, good luck answering.
The annual appropriation has remained stagnant for the last
30 years. This was the opening statements that all of you made.
We cannot solve this problem if we don't have additional money.
And if we are going backwards and reducing the appropriations,
it is going to get a whole lot dirtier out there.
Would you agree with that, Mr. Swingle?
Mr. Swingle. Yes, we support increasing investment in clean
water. It is absolutely critical to our communities.
Mr. Garamendi. And I heard you opine earlier that going the
opposite direction would create a significant issue of
contamination.
Thank you very much. I yield back.
Mr. Rouzer. Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman. Thank you, panelists.
In my district occurred almost 5 years ago was something
called the Camp Fire, which destroyed the town of Paradise,
about 150,000 acres, 20,000 buildings, caused the evacuation of
about 50,000 people, and, most tragically, 85 deaths. So, we
are working hard to help that town rebuild and recover, and
actually eventually be stronger than it was. So, they need to
be equipped in the future to do so.
So, just to set the scene, Paradise is a town on a ridge
above the larger town of Chico in Butte County, California.
Chico, being larger, has a college, more resources, et cetera.
So, after Paradise endured what was called the Camp Fire, the
priority became connecting their wastewater system to a
centralized wastewater solution down in Chico. The two towns
are cooperating on a regional system that will benefit both in
that setup. So, a pipeline would be needed to run from Paradise
up on the ridge southwest, approximately about 18 linear-miles
to the city of Chico for their plant.
So, for the town of Paradise, the lack of a sewer system
has hampered their economy actually for decades, and especially
post-fire. And post-fire, it has helped stall the recovery
efforts that they are seeking. So, they are trying to build
affordable housing, but without the system of sewers to do so,
it is really hard to do high density.
And as you know from replacing septic with a system like
this, it has a better potential to improve groundwater or not
have groundwater be harmed, as sometimes septic can do.
So, there have been multiple funding sources that have come
for this project from Federal and State government. We are
seeking the Federal funds through the connection payment, just
under $15 million through the Clean Water State Revolving Fund.
Unfortunately, the connection was ineligible for funds, as it
was not seen as an upgrade to the system.
So, there is a push and a trend towards increasing
regionalization like we are talking about with these two towns
and consolidation of wastewater treatment facilities. So,
regionalization would save considerable money, have economies
of scale, and improve the overall operation. It seems like a
good trend where it fits the folks involved.
So, in this case they both agree it is best for this
locality. And what we are finding, though, is that the
revolving fund was not set up to incentivize this particular
instance. So, I have heard of other instances where certain
projects are ineligible because they are not explicitly
upgrading the system, as I mentioned.
So, the bottom line, have any of you on the panel heard of
these situations where a project would not be a benefit--where
it would be a benefit but was not eligible for the funds? I am
sorry. So, what were the reasons the projects would be
ineligible? Have you heard of this sort of thing?
Do you want to start, Ms. Johnson, Mr. Swingle?
Ms. Johnson. In the Clean Water SRF programs, I know
regionalization is a local decision. I am not aware what the
particulars of that particular project to say whether or not--
--
Mr. LaMalfa [interrupting]. Well, other instances where
regionalization or the ineligibility--that they aren't able to
pull down the revolving funds. Have you heard of other
instances like that?
Ms. Johnson. Of where regionalization is eligible?
Mr. LaMalfa. Yes.
Ms. Johnson. Yes. Yes, consolidation and regionalization,
as far as I am aware, is an eligible activity.
Of course, these are State-run programs and have State
requirements to follow, as well. So--and again, I am not aware
of the particulars of this project. I can't say for certain on
why they would----
Mr. LaMalfa [interrupting]. Yes. I am just wondering in
general.
Ms. Johnson [continuing]. Determine it ineligible.
Mr. LaMalfa. Let me go to Mr. Swingle, please. Thank you.
Ms. Johnson. Yes.
Mr. LaMalfa. Have you--are you hearing of, because of
regionalization, it doesn't meet the upgrade criteria?
Mr. Swingle. That is not something that I have the details
on, whether there is--on specific eligibility for that type of
activity.
Mr. LaMalfa. OK. Mr. Proctor.
Mr. Proctor. I don't have any details on that, as well.
The one thing I would note, though, is I think this, in
part, is something that Mr. Garamendi's bill would address, is
that your private utilities currently--because they are
ineligible for Clean Water SRF funding, if they do decide to
come in and partner with a public utility, any outstanding SRF
loans have to be paid back immediately, and that is a
substantial barrier to those sort of assistance efforts.
Mr. LaMalfa. OK, all right, I already burned through the
time, so, thank you, panelists.
We shouldn't have this barrier because, even though
regionalization is a plus, it should also be considered an
upgrade to the overall system. Indeed, you are getting overall
improvements and better water quality. So, we need to look at
how we can improve that eligibility and help towns like that.
I yield back. Thank you, Mr. Chairman.
Mr. Rouzer. Mr. DeSaulnier.
Mr. DeSaulnier. Thank you, Mr. Chairman. Thank you, Ranking
Member and panelists.
It is interesting, following two neighbors, northern
Californians, Mr. Garamendi and Mr. LaMalfa, both who are good
friends. And I have stories I can share, and they can have some
for me, too, as well. But in the context of this hearing, Mr.
Garamendi and I represent portions of the delta, both of us
different times in our careers in redistricting.
So, Ms. Hammer, in the context of the State and local title
of this hearing, in northern California and California in
particular, we have been working on the challenges for climate
change, and our economy, and our workforce, and our environment
for a long time. Certainly in the delta, protecting our levees.
We know that a lot of them were engineered and built a long
time ago. So, all of this--there is a synergy. Fortunately, we
prepared. We have got the issue in southern California with the
Colorado River and our partnerships.
But my question to you first is, because we have prepared--
and not enough--we can spend this money, the $50 billion from
the infrastructure bill. We are more prepared, we have got more
oversight in many ways. Other parts of the country do,
reflecting their constituency. And in the current budget
request by the administration, we are increasing by $250-$270
million our infrastructure for clean water.
But if the appropriations bill, as currently constructed,
there would be a 67-percent cut. So, in the context of your
background, preparing for future generations, preparing for
clean water in a complicated environment, we can't back away.
Any kind of interruption has serious consequences.
And to the other conversation about workforce development--
Mr. Proctor, maybe if we have time you can chime in on this--
our experience with my local districts in the bay area is we
have a workforce because of our Davis-Bacon and stronger
provisions, and nonunion contractors can compete, as well, if
they want to invest in apprenticeship programs. But we are
going into high schools and recruiting people in the building
trades, the operating engineers, a lot of disadvantaged kids.
So, that is a challenge. But where we really have a challenge
is on the professional side, where we are trying to get kids
into engineering schools. We have partnerships with the
University of California because we don't have enough.
So, that is a long-winded--first part is, how do we prepare
for the environment we are in so that we can avoid the cost, as
Mr. LaMalfa talked about, these catastrophic climate-induced
challenges, whether it is Paradise or whether it is flooding
throughout the country?
Ms. Hammer. Of course, climate change is something that all
communities need to be preparing for.
Speaking of wildfire, just the wildfires that just happened
in Hawaii had significant impacts on water and wastewater
systems in Maui. It is going to be very expensive to address.
One thing I haven't heard--we have been talking a lot about
wet weather impacts of climate change. But one thing we haven't
discussed as much today is drought. And there are a number of
projects that could be eligible for Clean Water SRF funding to
address drought, such as water reuse and recycling projects,
which tend to be very cost intensive. So, we do need to keep
the funding levels up enough to support these important
projects that are going to help communities continue to be
resilient into the future.
And then, in the past we have also supported proposals to
have applicants consider climate impacts as they are planning
and designing projects. If they are receiving Federal funds,
that they could be required to take a look at how climate
change might affect the design of the project that they are
applying for funding for. That is something we would continue
to support.
Mr. DeSaulnier. Mr. Proctor, I want to ask you something
just that you triggered.
But first off, I just had a meeting with my BlueGreen
Alliance folks, and it is working. Even without the regulation,
we are making a business argument that we can transition, and a
lot of this is on the air quality side.
Mr. Proctor, the question about--in California it used to
be a north-south argument about water. Now it is more east-
west. A lot of the stuff that we did in the legislature, the
industrial agriculture industry is actually moving to be more
efficient about reuse, and it is benefiting them from a
financial standpoint. So, we still want to protect them and
almond farmers like Mr. LaMalfa to a certain degree, but we
also want to be ready for the change.
I wonder if you could opine on just the business model of
reuse and more efficient use of water, particularly for the
business community.
Mr. Proctor. Well, I can give you a concrete example of how
industry can be creative on this point. We have a plant in New
Jersey that has a complete stormwater capture system. It
captures all the stormwater that falls on our plant site, it
recirculates it, it treats it, and then uses that water in the
manufacturing process so that we don't have to use potable
water or other precious resources like that.
And so, there are a lot of opportunities out there to do
just that. Water reuse generally, whether it is in industrial
applications like I was talking about, or using gray water for
other applications--flushing toilets, that sort of thing--are
all important ways to try and conserve what we recognize is an
increasingly scarce resource, clean water.
Mr. Rouzer. Well, thank you very much. I appreciate our
panelists being here today.
Seeing no other Member that hasn't already had an
opportunity to comment and ask questions, I ask unanimous
consent that the record of today's hearing remain open until
such time as our witnesses have provided answers to any
questions that may be submitted to them in writing.
Without objection, so ordered.
I also ask unanimous consent that the record remain open
for 15 days for any additional comments and information
submitted by Members or witnesses to be included in the record
of today's hearing.
Without objection, so ordered.
The subcommittee stands adjourned.
[Whereupon, at 12:11 p.m., the subcommittee was adjourned.]

Submissions for the Record

----------

Letter of October 4, 2023, to Hon. Sam Graves, Chairman, and Hon. Rick
Larsen, Ranking Member, Committee on Transportation and Infrastructure,
from Sean McGarvey, President, North America's Building Trades Unions,
Submitted for the Record by Hon. Grace F. Napolitano
October 4, 2023.
The Honorable Sam Graves,
Chairman,
Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Rick Larsen,
Ranking Member,
Committee on Transportation and Infrastructure, U.S. House of
Representatives, Washington, DC 20515.
Dear Chairman Graves and Ranking Member Larsen:
During the September 28, 2023, hearing of the Subcommittee on Water
Resources and the Environment titled, ``Clean Water Infrastructure
Financing: State and Local Perspectives and Recent Developments,'' the
Council on Infrastructure Financing Authorities (CIFA) submitted
testimony that reflects a fundamental misunderstanding of the Davis-
Bacon Act--a law that enjoys broad bipartisan support among the Members
of the Transportation and Infrastructure Committee, as well as the full
House. On behalf of the over 3 million skilled craft professionals that
comprise North America's Building Trades Unions (NABTU), I write to
strongly oppose the misguided recommendations of CIFA which seek to
dilute a framework that has, for over 90 years, protected the wages of
construction workers and their families.
The Davis-Bacon Act (DBA) of 1931 protects the wages and benefits
of construction workers by prohibiting contractors on federal projects
from paying less than the locally going rate, known as the prevailing
wage. Congress passed the DBA out of concern that aggressive bidding in
federal procurement was producing a race to the bottom in local area
wages and benefits. Since the enactment of the DBA, Congress has passed
over 100 laws applying prevailing wage requirements to projects that
receive various forms of federal assistance, including grants, loans,
guarantees, insurance, bonds, and clean energy tax credits. For nearly
a century, NABTU and its affiliates have advocated for prevailing wage
protections because such laws help construction workers maintain a
decent standard of living, and they ensure that contractors compete for
contracts on the basis of merit, rather than on who can exploit the
cheapest workforce.
To be effective, prevailing wages must reflect actual wages paid to
workers in their communities, not mathematically contrived averages.
For this reason, in determining the prevailing wage, the U.S.
Department of Labor (DOL) has consistently given priority to the modal
rate--that is, the wage rate that appears most frequently in a
community for a given classification. CIFA's recommendation that DOL
adopt wages published by the Bureau of Labor Statistics (BLS) when job
classifications are missing from a wage determination is directly at
odds with Congress's intent in enacting the DBA because BLS rates do
not reflect actual wages paid to workers in their communities. For
example, BLS does not collect fringe benefit data, nor does it collect
data by county level or by construction type.
BLS therefore produces imprecise watered-down average rates paid to
no one.
CIFA's criticism of DOL's conformance process is also misguided.
Conformance is the method DOL uses to add missing classifications to
wage determinations. Conformances are necessary where DOL wage surveys
yield insufficient data to publish a prevailing wage for a
classification. Under the current system, contractors are responsible
for submitting to the contracting agency a form with the proposed
classification and rate of pay to be added. The contracting agency then
submits that form to DOL for final approval. Contrary to CIFA's claim
that the process is riddled with delays, DOL responds to most requests
within 30 days. See U.S. DOL, Prevailing Wage Resource Book, Davis-
Bacon Additional Classification Process (Conformances), at 4 (May
2015). What's more, the new DBA regulations which take effect this
month further streamline the process by authorizing DOL to proactively
add missing classifications to wage determinations, instead of relying
exclusively on contractor requests. 29 C.F.R. Sec. 1.3(f)(as amended in
88 Fed. Reg. 57526).\1\
---------------------------------------------------------------------------
\1\ CIFA also recommends that DOL consider adopting prevailing wage
rates established by state governments pursuant to their own prevailing
wage laws. The new DBA regulations authorize DOL to do just that where
the state's criteria for establishing the prevailing wage is
``substantially similar'' to DOL's. 29 C.F.R. Sec. 1.3(g)-(i) (as
amended in 88 Fed. Reg. 57526)
---------------------------------------------------------------------------
CIFA also argues that the ``paperwork'' associated with DBA
enforcement is ``prescriptive'' and ``burdensome,'' especially for
contractors who operate in states with state prevailing wage laws. On
all DBA-covered projects, contractors and subcontractors must submit
weekly certified payroll reports (CPR) to the government to ensure
compliance with prevailing wage requirements. Contrary to CIFA's
claims, CPR reporting is a rather simple and straightforward process
typically managed through payroll software. And the data collected in
CPRs is not much different than the data responsible contractors
already collect for their daily logs. CIFIA also argues that the
reporting requirements under the DBA are duplicative. It is important
to note here that state prevailing wage laws vary a great deal with
respect to compliance monitoring and enforcement. Some state laws
include periodic reporting requirements, while others do not. See,
e.g., Mont. Code Sec. 18-2-423; Tex. Gov't Code Sec. 2258.024; Va.
Code. Sec. 2.2-4321.3(H). The scope of coverage also varies from state
to state and, contrary to CIFA's suggestion, state prevailing wage laws
will not automatically apply to DBA-covered projects. For example,
Maryland and Colorado's state prevailing wage laws do not apply to
contracts for construction that receive federal funding or that are
otherwise covered by the Davis-Bacon Act. See, e.g., Colo. Rev. Stat.
Sec. 24-92-201 et seq.; MD Code State Fin. & Proc. Sec. 17-202(b)(2).
The DBA's reporting requirements are critical to enforcement. CPR
submissions are an important deterrent against dishonest contractors
because CPRs can serve as the basis for federal prosecution. Section
3145(b) of the Act provides that falsification of a certified payroll
may amount to a criminal violation under 18 U.S.C. Sec. 1001, that can
result in a fine, up to 5 years in prison, or both. The falsification
of payrolls can also be grounds for a lawsuit under the False Claims
Act, 31 U.S.C. Sec. 3730. Accordingly, reporting requirements protect
construction workers on federal and federally assisted projects, as
well as the taxpayer from instances of fraud and abuse.
The DBA's compliance monitoring framework, which relies primarily
on CPR submissions, is particularly important given that the
construction industry consistently ranks among the top three industries
for noncompliance. U.S. DOL Website, WHD by the Numbers 2022, https://
www.dol.gov/agencies/whd/data/charts/low-wage-high-violation-
industries; see also GAO-21-13 at 17 (Dec. 2020).
In fact, just three days before CIFA submitted its testimony to the
Committee, DOL announced that it had recovered $101,287 in back wages
and benefits for 51 workers who were short-changed by contractors on
various DBA-covered projects in California. One week earlier, DOL
announced that it had recovered $947,000 in back wages from four
contractors on DBA-covered projects in Oregon and Washington.
While the hearing did address many important questions, our members
simply cannot allow misleading claims and attacks against a
foundational standard to go unanswered. A strong, bipartisan majority
of the Committee understand the importance of the Davis-Bacon Act to
construction workers across the nation. NABTU looks forward to working
with you and other strong supporters of Davis-Bacon on the Committee to
ensure the consistent application of prevailing wage standards.
Sincerely,
Sean McGarvey,
President, North America's Building Trades Unions.

Letter to Hon. Sam Graves, Chairman, and Hon. Rick Larsen, Ranking
Member, Committee on Transportation and Infrastructure, and Hon. David
Rouzer, Chairman, and Hon. Grace F. Napolitano, Ranking Member,
Subcommittee on Water Resources and Environment, from Mark McManus,
General President, United Association of Union Plumbers and
Pipefitters, Submitted for the Record by Hon. Grace F. Napolitano
General Office File Reference: GP.
The Honorable Sam Graves,
1135 Longworth HOB,
Washington, DC 20515.
The Honorable Rick Larsen,
2163 Rayburn HOB,
Washington, DC 20515.
The Honorable David Rouzer,
2333 Rayburn HOB,
Washington, DC 20515.
The Honorable Grace Napolitano,
1610 Longworth HOB,
Washington, DC 20515.
Dear Chairman Graves, Chairman Rouzer, Ranking Member Larsen, and
Ranking Member Napolitano,
The more than 370,000 hardworking men and women of the United
Association of Union Plumbers and Pipefitters (UA) are incredibly proud
to go to work every day to deliver clean and safe water to all
communities across our great nation. For generations, Davis-Bacon
prevailing wage provisions have protected the ability of working
families to earn fair wages.
The Clean Water State Revolving Funds (SRFs) are an essential
component to our shared mission of protecting the health of the nation.
Your leadership on this issue has meant the United States continues to
be a world leader on water infrastructure, and a model for the world to
follow. Unfortunately, in recent testimony submitted to the
subcommittee, the important role Davis-Bacon provisions play to protect
working families came under baseless attacks from the Council of
Infrastructure Financing Authorities (CIFA), who claimed that Davis-
Bacon requirements on Clean Water SRFs are onerous on state agencies
and businesses, and that compliance with Davis-Bacon requirements are
``not an issue'' given the tight labor market.
This testimony misses the mark and is nothing more than an attempt
to undercut fair wages and ensure unscrupulous contractors can continue
to profit off the backs of the hardworking men and women who protect
our water infrastructure. Davis-Bacon is an essential tool to protect
fair wages and to crack down on wage theft. In fact, the U.S.
Department of Labor's Wage and Hour Division continues to enforce these
provisions and collect millions in back wages for workers who were
cheated out of their hard-earned fair wages.
Simply put, CIFA's proposed changes to SRF funding would not only
hurt American workers; it would weaken our standing on the world stage
as a leader in clean water infrastructure and put our communities at
risk. I applaud the strong bipartisan majorities on this Committee and
Subcommittee who understand and support the tremendous value Davis-
Bacon provides, and our continued partnership to ensure that the
Plumber always protects the health of the nation.
Sincerely yours,
Mark McManus,
General President, United Association of Union Plumbers and
Pipefitters.

Statement of Patricia Sinicropi, Executive Director, WateReuse
Association, Submitted for the Record by Hon. Grace F. Napolitano
Thank you for providing the opportunity to submit written testimony
on Clean Water Infrastructure Financing: State and Local Perspectives
and Recent Developments. I submit this testimony today on behalf of the
WateReuse Association and its members to highlight the importance of
financing water reuse and recycling to build resiliency and strengthen
America's infrastructure.
WateReuse is a not-for-profit trade association for water
utilities, businesses, industrial and commercial enterprises, non-
profit organizations, and research entities that advocate for water
recycling. WateReuse and its state and regional sections represent
nearly 250 water utilities serving over 60 million customers, and over
200 businesses and organizations across the country. The WateReuse
Association's mission is to engage its members in a movement for safe
and sustainable water supplies, to promote acceptance and support of
recycled water, and to advocate for policies and funding that increase
water reuse.
Water reuse, also known as water recycling, is the process of
intentionally capturing wastewater, stormwater, saltwater or graywater
and cleaning it as needed for a designated beneficial freshwater
purpose, such as drinking, industrial processes, irrigation,
groundwater replenishment, and watershed restoration. The fundamental
principle of water reuse is using the right water for the right
purpose, everywhere and all the time. By advancing water reuse, we
protect public health and the environment while supporting strong and
growing local economies.
Across the country, water, wastewater, and stormwater managers have
shown that water recycling is often a central feature in innovative,
integrated approaches to solving water management challenges. In the
West and South, the integration of water recycling has often been
driven by water supply challenges and the need for drought-resilient
supplies. Elsewhere in the country, water recycling has been used to
help manage stormwater, address water quality challenges, and relieve
overburdened combined sewer-stormwater management systems. Water reuse
is helping communities along our coasts manage sea level rise and
saltwater intrusion by replenishing depleted coastal aquifers. It is
also increasingly used as an economic development tool, attracting
businesses and growing jobs by providing a stable water supply and a
pathway to protect local groundwater and surface water.
To help communities achieve these goals, Congress reauthorized the
Pilot Program for Alternative Water Source Grants (33 U.S.C. 1300) as
part of the Infrastructure Investment and Jobs Act (IIJA) of 2021.
Through the program, EPA will make competitive grants to state,
interstate, and intrastate water resource development agencies to
engineer, design, construct, and test alternative water source systems,
including water reuse and stormwater management systems. The House FY
2024 Interior-Environment Appropriations bill includes start-up funding
of $3 million for the program, whereas the Senate companion includes
none. We urge this Committee to work with appropriators to ensure that
the final FY 2024 appropriations package makes this important
investment in water recycling.
In addition to funding the Pilot Program for Alternative Water
Source Grants, we urge you to work with the Appropriations Committee to
fully fund the Clean Water and Drinking Water State Revolving Fund
(SRF) Programs in final FY 2024 appropriations legislation. The cuts
proposed in the House Interior-Environment Appropriations bill would
severely limit communities' ability to access financing for water
recycling and other water infrastructure projects. Moreover, we ask
that Congress fund Clean Water and Drinking Water earmarks on top of
and in addition to rather than from within funding for SRF
capitalization grants. The current approach of funding earmarks from
within the SRF capitalization grants budget is undermining states'
ability to operate and maintain viable revolving loan programs.
Investments in water reuse build communities that are modern,
sustainable and stable--ready for families to flourish and businesses
to grow. We urge Congress to act swiftly to provide communities the
tools and resources they need to modernize their infrastructure, build
resilience, and protect the environment and public health.
Thank you for considering our testimony. Please do not hesitate to
reach out to the WateReuse Association's Policy Director, Greg Fogel,
with any questions.

Appendix

----------

Questions to Lori Johnson, Assistant Chief, Financial Assistance
Division, Oklahoma Water Resources Board, on behalf of the Council of
Infrastructure Financing Authorities, from Hon. David Rouzer

Question 1. In her written testimony, fellow hearing witness Ms.
Hammer stated that, ``Under the Green Project Reserve (GPR)
requirement, states do not have strong incentives to educate potential
applicants about the benefits of green projects and the availability of
GPR funding, nor to assist them with their funding applications.'' \1\
Does Oklahoma--and other states in general--need mandates to finance
green projects?
---------------------------------------------------------------------------
\1\ Clean Water Infrastructure Financing: State and Local
Perspectives and Recent Developments, Hearing before the Water
Resources and Environment Subcomm. of the H. Comm. on Transp. and
Infrastructure, 118th Cong. (Sept. 28, 2023) (written testimony of
Rebecca Hammer, Deputy Director, Federal Water Policy, Natural
Resources Defense Council).
---------------------------------------------------------------------------
Answer. The Clean Water State Revolving Funds (SRFs) are effective
because states can customize their programs to meet the unique public
health, environmental and affordability challenges of their
communities. Allowing each state to prioritize projects is foundational
to the success of the SRFs; flexibility under the broad federal
framework ensures the SRFs can be responsive to the most important and
ever-evolving needs of people and the environment in each state.
Congress doesn't provide additional funding for green projects.
Instead, Congress mandates that a percentage of annual federal funding
be used to fund green projects as defined by the U.S. Environmental
Protection Agency (EPA). While well-intended, federal mandates to fund
specific types of projects, whether grey or green, undermines this
proven state prioritization process. Displacing state priority projects
with federally mandated projects may jeopardize public health and
environmental protection.
Moreover, the SRFs are subsidized loan programs. Unlike grant
programs, loan programs depend on demand from borrowers, who also
prioritize funding for projects that are most important, such as for
compliance with rigorous water quality standards. In some cases, SRFs
must use federal funding as grants or principal forgiveness, instead of
subsidized loans, to incentivize green projects. Using federal funding
for grants and principal forgiveness permanently eliminates a recurring
source of revenue for water infrastructure projects in the future.
As you can see below, Oklahoma has invested 44% of cumulative
federal funding since 2008 for green projects, well above the ten
percent mandate in recent annual appropriations bills. In fact, every
SRF has exceeded the ten percent mandate, largely due to growing demand
from borrowers. Because not all water infrastructure projects report
their green components, it's very likely that these percentages
underrepresent the total actual investment in green projects.
New or ``permanent'' mandates are unnecessary. Perhaps more
importantly, eliminating the federal mandate for green projects would
have little, if any, impact, since many communities, today, routinely
incorporate green strategies into their capital improvement plans and
projects as a way to improve service, resiliency, outcomes and the
bottom-line.

----------------------------------------------------------------------------------------------------------------
Federal Funding Spending on Green
State since 2008 Projects \\ %
----------------------------------------------------------------------------------------------------------------
Alabama......................................................... $ 253,793,500 $ 44,288,913 17%
Alaska.......................................................... $ 135,627,800 $ 27,246,401 20%
Arizona......................................................... $ 142,447,100 $ 40,476,351 28%
Arkansas........................................................ $ 137,939,900 $ 198,723,531 144%
California...................................................... $ 1,509,112,307 $ 2,051,670,442 136%
Colorado........................................................ $ 169,344,400 $ 46,288,996 27%
Connecticut..................................................... $ 258,521,800 $ 35,649,893 14%
Delaware........................................................ $ 103,252,400 $ 100,514,706 97%
Florida......................................................... $ 715,349,493 $ 236,163,068 33%
Georgia......................................................... $ 374,964,216 $ 311,458,609 83%
Hawaii.......................................................... $ 163,088,800 $ 67,743,334 42%
Idaho........................................................... $ 103,252,400 $ 131,875,350 128%
Illinois........................................................ $ 954,463,933 $ 314,966,571 33%
Indiana......................................................... $ 508,606,048 $ 621,510,310 122%
Iowa............................................................ $ 294,674,200 $ 130,180,072 44%
Kansas.......................................................... $ 190,453,500 $ 85,701,073 45%
Kentucky........................................................ $ 268,585,200 $ 62,622,640 23%
Louisiana....................................................... $ 239,430,500 $ 36,684,426 15%
Maine........................................................... $ 163,319,600 $ 80,690,046 49%
Maryland........................................................ $ 510,421,657 $ 216,489,252 42%
Massachusetts................................................... $ 716,522,029 $ 140,677,580 20%
Michigan........................................................ $ 907,431,252 $ 233,160,195 26%
Minnesota....................................................... $ 398,426,165 $ 149,335,778 37%
Mississippi..................................................... $ 186,500,093 $ 19,981,710 11%
Missouri........................................................ $ 603,702,512 $ 236,607,038 39%
Montana......................................................... $ 103,252,400 $ 27,376,031 27%
Nebraska........................................................ $ 107,626,700 $ 52,857,503 49%
Nevada.......................................................... $ 103,252,400 $ 44,900,863 43%
New Hampshire................................................... $ 217,636,900 $ 69,498,053 32%
New Jersey...................................................... $ 1,053,501,973 $ 141,788,838 13%
New Mexico...................................................... $ 111,076,700 $ 42,979,820 39%
New York........................................................ $ 2,753,037,314 $ 397,612,493 14%
North Carolina.................................................. $ 352,199,248 $ 148,484,429 42%
North Dakota.................................................... $ 103,926,700 $ 85,773,132 83%
Ohio............................................................ $ 1,226,374,893 $ 295,019,116 24%
Oklahoma........................................................ $ 170,457,300 $ 74,155,749 44%
Oregon.......................................................... $ 238,382,700 $ 43,945,073 18%
Pennsylvania.................................................... $ 835,963,728 $ 158,030,647 19%
Rhode Island.................................................... $ 141,607,900 $ 30,651,118 22%
South Carolina.................................................. $ 212,081,670 $ 42,909,865 20%
South Dakota.................................................... $ 103,252,400 $ 12,723,217 12%
Tennessee....................................................... $ 306,571,400 $ 119,457,472 39%
Texas........................................................... $ 923,051,700 $ 325,840,020 35%
Utah............................................................ $ 110,905,500 $ 22,452,523 20%
Vermont......................................................... $ 106,526,700 $ 38,792,107 36%
Virginia........................................................ $ 431,900,531 $ 192,568,905 45%
Washington...................................................... $ 367,033,331 $ 115,470,269 31%
West Virginia................................................... $ 329,262,879 $ 45,098,026 14%
Wisconsin....................................................... $ 570,537,777 $ 387,221,250 68%
Wyoming......................................................... $ 103,252,400 $ 19,030,389 18%
Puerto Rico..................................................... $ 284,720,041 $ 51,553,042 18%
-----------------------------------------------
$ 21,376,623,990 $ 8,606,896,235 40%
----------------------------------------------------------------------------------------------------------------
\\ Spending on green projects from 2008 to 2021.

Question 2. You noted that the Federal mandate requiring state
revolving fund (SRF) loan applicants to demonstrate adherence to
Federal prevailing wage laws is very prescriptive, and creates a
significant compliance burden, without actually providing any
additional financial benefit to workers.
However, a letter entered into the record during this hearing from
the International Union of Operating Engineers suggests that Davis-
Bacon compliance is an issue for workers.\2\
---------------------------------------------------------------------------
\2\ Letter from James T. Callahan, General President, Int'l Union
of Operating Engineers, to Sam Graves, Chairman, H. Comm. on Transp.
and Infrastructure, David Rouzer, Chairman, Subcomm. on Water Resources
and Environment, Rick Larsen, Ranking Member, H. Comm. on Transp. and
Infrastructure, and Grace Napolitano, Ranking Member, Subcomm. on Water
Resources and Environment (Sept. 28, 2023) (on file with Comm.).
---------------------------------------------------------------------------
Question 2.a. How do you respond to the suggestion that ``cheating
on prevailing wages is rampant?'' \3\
---------------------------------------------------------------------------
\3\ Id.
---------------------------------------------------------------------------
Answer. The Clean Water SRFs don't have knowledge of ``rampant
cheating'' and the International Union of Operating Engineers didn't
provide any empirical evidence of ``rampant cheating'' on water
infrastructure projects funded by the Clean Water SRFs.
However, the SRFs acknowledge that the prescriptive nature of Davis
Bacon can certainly lead to cases of unintentional non-compliance. In
states with prevailing wage laws, it is understandable that state and
federal requirements, which are different, may be confused. Even
federal requirements that seem simple, such as paying weekly, can
create the chance of non-compliance for businesses that pay on a
different schedule for privately funded work. Lack of published wages
for water workers in rural areas can also lead to unintentional
noncompliance.
For example, as I mentioned in my testimony, one borrower whose
project spanned two counties didn't change the wages when workers
crossed the county line, which led to non-compliance. However, honest
mistakes shouldn't be characterized as ``rampant cheating.''

Question 2.b. How may simplifying compliance procedures actually
reduce non-compliance and ensure workers are compensated correctly?
Answer. Simplifying the compliance processes and procedures would
provide the ability to differentiate between contractors who are
intentionally underpaying workers from those who may be unintentionally
non-compliant. If the processes and procedures are clear and easy to
follow, it would be evident which contractors are intentionally
breaking the law and not paying the mandated wages.

Question 3. Since 2021, the Build America, Buy America Act has
required all Federally funded SRF projects to use iron, steel,
construction materials, and manufactured products in the United
States.\4\ However, inconsistent guidance towards similar types of
water infrastructure projects amongst Federal agencies, and even within
Environmental Protection Agency (EPA) have caused uncertainty and extra
regulatory headaches for important projects. How can the Federal
Government streamline Build America, Buy America guidelines without
raising the cost and extending the timeline for important projects?
---------------------------------------------------------------------------
\4\ Infrastructure Investment and Jobs Act, Pub. L. No. 117-58, 135
Stat. 429.
---------------------------------------------------------------------------
Answer. Congress should require a uniform set of rules and
requirements for compliance with domestic procurement requirements in
the Build America, Buy America Act (BABAA) and should eliminate the
duplicative mandate for American Iron and Steel (AIS), which adds more
paperwork without more protection. Different rules and requirements for
the same types of water infrastructure projects will lead to confusion
across the water sector and increase the potential for unintentional
non-compliance. Consistency will also provide clarity and reliability
to manufacturers.
Congress should mandate a timeframe, such as 15 days, for EPA and
the Office of Management and Budget Made in America Office (MAIO) to
make decisions on waiver requests. Since both EPA and the MAIO must
approve each and every BABAA waiver, implementing a deadline for
expeditious review will ensure projects stay on time, on track and on
budget.
Congress should also consider codifying exceptions or waivers for
public health. Unlike other sectors, water infrastructure projects use
complex water treatment technologies that are needed to meet rigorous
federal water quality standards for safe drinking water and pollution
prevention. Public health protections should not be weakened or delayed
for compliance with procurement requirements.
Congress should implement the requirements in three phases--phase
one for iron and steel, phase two for construction materials, and phase
three for manufactured products. Because manufactured products in water
infrastructure projects can be highly technical equipment, more time is
needed to ensure implementation leads to the long-term success of
BABAA.

Question 4. Following passage of the Infrastructure Investment and
Jobs Act (IIJA) (P.L. 117-58), the EPA issued a memorandum outlining
signage requirements for SRF projects receiving IIJA funding.\5\
---------------------------------------------------------------------------
\5\ Memorandum from Raffael Stein, Director, Water Infrastructure
Division, Office of Water, EPA, and Anita Maria Thompkins, Director,
Drinking Water Infrastructure Development Division, Office of Water,
EPA, to Water Division Directors, Regions I-X (Dec. 8, 2022), (on file
with Comm.).
---------------------------------------------------------------------------
Question 4.a. What requirements do this, and other similar
memorandums, add to SRF projects and how do such requirements increase
costs?
Answer. Although not required by law, The White House Office of
Management and Budget (OMB) requires recipients of federal funding from
the IIJA, even in the form of loans, to post signs at construction
sites. EPA applies this mandate as a term and condition of receiving
annual federal funding through the SRF capitalization grant.
``The recipient will ensure that a sign is placed at construction
sites supported in whole or in part by this award displaying the
official Investing in America emblem and must identify the project as a
``project funded by President Biden's Bipartisan Infrastructure Law''
or ``project funded by President Biden's Inflation Reduction Act'' as
applicable. The sign must be placed at construction sites in an easily
visible location that can be directly linked to the work taking place
and must be maintained in good condition throughout the construction
period.''
Signs must display the ``Building A Better America Emblem and must
identify the project as a project funded by President Biden's
Bipartisan Infrastructure Law.''
Signage requirements apply to projects that are supported by
appropriations in the IIJA:
Construction projects identified as ``equivalency
projects'' for general supplemental capitalization grants;
Construction projects that receive additional
subsidization (grants or forgivable loans) made available by general
supplemental capitalization grants;
All construction projects funded with emerging
contaminants capitalization grants;
All construction projects funded with lead service line
replacement capitalization grants.

Signage mandates increase the cost of water infrastructure
projects, especially if the signs need to be repaired or replaced
multiple times during a lengthy construction period. Additionally,
prescriptive signage requirements may not accurately or proportionally
represent multiple sources of funding, including non-federal sources
that exceed the federal contribution, for some projects. Perhaps most
problematic is that these signs may lead communities to believe that
these water infrastructure projects are funded with a federal grant,
instead of a subsidized loan which must be repaid, with interest, by
ratepayers.
In addition to increasing the cost of water infrastructure projects
and potentially misleading the public about the nature of the federal
financial assistance (loan vs. grant), the public may confuse these
official government notices as campaign signs based on guidance in the
brand guide. (See attached.)
Attachments
``Investing in America Signage Guidelines''
-and-
``Project Funding Source Sign Assembly''
[Editor's note: ``Investing in America Signage Guidelines,'' issued
by the White House Office of Digital Strategy, is retained in committee
files and is available online at https://www.whitehouse.gov/wp-content/
uploads/2023/02/Investing-in-America-Brand-Guide.pdf. ``Project Funding
Source Sign Assembly'' is an older version of the aforementioned
guidelines and is retained in committee files.]

Question 4.b. Are such signage requirements also in place for
projects that are receiving funding from sources aside from IIJA?
Answer. The EPA requires SRF loan recipients to post signs on
construction sites of federally funded or equivalency projects.
However, EPA allows other forms of notifications such as press
releases, inserts in water bills, and online and social media postings,
which provides a cost-effective alternative.

Questions to Todd P. Swingle, P.E., Chief Executive Officer and
Executive Director, Toho Water Authority, on behalf of the National
Association of Clean Water Agencies, from Hon. David Rouzer

Question 1. Innovation is key to moving our clean water
infrastructure into the 21st century.
Question 1.a. Please explain what new technologies and approaches
such as integrated planning have the potential to do for the wastewater
sector in terms of innovation and regulatory flexibility.
Answer. Integrated Planning (IP) and the use of new technologies go
hand-in-hand. IP enables utilities and the communities that they serve
to take a more proactive role in determining the manner and sequencing
of how they will meet their Clean Water Act obligations. And by
providing this flexibility, IP also allows utilities and their
communities to investigate new technologies and approaches that may
provide the same or better environmental performance for less cost. For
instance, if a utility is seeking to reduce the amount of sewer
overflows they are experiencing during wet weather events, the use of
green infrastructure through an integrated plan instead of building
more tunnels may allow for better environmental results at lower cost
and improved affordability for communities.

Question 1.b. What is the latest status of EPA's rollout of
integrated planning?
Answer. EPA Headquarters, from NACWA's perspective, has been very
supportive of IP in both the permitting and enforcement context.
Unfortunately, where we have seen some resistance from EPA to IP,
especially in the permitting context, is from EPA regional offices.
Some regional offices are very supportive, others are not. We have also
seen that many states are also resistant to IP. This is unfortunate,
because if a state is not willing to support a utility's IP efforts,
there is very little the utility can do.

Question 1.c. What effects does innovation have on affordability
for local wastewater utilities and ratepayers?
Answer. The more innovation the better from an affordability
standpoint. Innovation allows utilities to meet their Clean Water Act
goals in more affordable ways, which in turn places less stress on
rates and can hopefully lead to smaller rate increases.

Question 2. In your written testimony, you mentioned concerns with
the EPA's new financial capability guidelines. How do incomplete or
incorrect financial capability guidelines affect water affordability
for treatment facilities and homeowners?
Answer. EPA's Financial Capability Assessment (FCA) Guidance is a
critical tool designed to gauge the impacts of CWA mandates and how
much a community can afford to pay to meet those compliance
requirements.
With the ever-increasing water affordability challenges communities
are facing, it's imperative that any FCA guidance truly looks at the
impacts of CWA mandates and related bill increases on low-income
households within a community.
Countless American households, both urban and rural, are struggling
to pay their increasing water and sewer bills all while public
utilities are seeing increased costs related to regulatory compliance,
maintaining infrastructure, energy, supplies, etc.
NACWA and its utility members, who work directly on the ground with
low-income households, partnered with other water sector and municipal
groups over the past several years to advocate for a new EPA
affordability approach that looks at the impacts of new CWA mandates
and related bill increases on actual low-income households within an
impacted community, as opposed to more broad-brush comparisons of
community and national level metrics that often mask the actual impact
on individual households. This was done collaboratively and
productively with both the Obama and Trump Administrations.
Unfortunately, the new EPA FCA Guidance fails to take this
household level approach, meaning that the true impacts on these
households may not be fully considered and leaving them to continue
paying a disproportionately higher amount of their income on clean
water bills. It is critical that Congress continue strict oversight of
how EPA is implementing its new FCA Guidance and the ways in which it
is harming low-income households the most.

Question 3. A National Association of Clean Water Agencies (NACWA)
member testified before this Subcommittee earlier this year about the
importance of regulatory certainty, especially for local water
utilities. How can targeted reforms to the Clean Water Act allow
localities to more effectively and affordably plan their wastewater
infrastructure projects and operations?
Answer. Codification of EPA's longstanding permit shield policy
would ensure that permittees are provided the finality granted by
Congress and upheld by the Supreme Court by clarifying the proper scope
of CWA Section 402(k). This action would help protect due process and
the regulatory certainty necessary to make appropriate infrastructure
investments and address affordability challenges for municipalities
nationwide.
Similarly, removing boilerplate language and requiring clear NPDES
permit terms would force federal and state permit writers to do their
jobs in a manner that permittees can rely on; limit opportunities for
unwarranted posthoc permitting requirements; protect permit holders
that are following their duly issued NPDES permits; and shield public
utility ratepayers and consumers from shouldering the potentially
significant costs mandated by unanticipated permitting requirements.
These are both critical as public clean water utilities try to
affordably plan and invest in their long-term infrastructure needs and
meet their compliance obligation under the CWA.
Making EPA recommended water quality criteria subject to APA notice
and comment rulemaking requirements would also ensure a more
transparent process. This is important because these criteria often
lead to the imposition of incredibly stringent and costly permitting
requirements on both the public and private sectors.

Questions to James M. Proctor II, Senior Vice President, Legal and
External Affairs, McWane, Inc., on behalf of the U.S. Chamber of
Commerce, from Hon. David Rouzer

Question 1. In your written testimony you stated that, ``wastewater
is often viewed as a source of pollution but should be promoted as a
resource to provide sustainable nutrients and energy.'' \1\ What are
some examples of recycled wastewater applications?
---------------------------------------------------------------------------
\1\ Clean Water Infrastructure Financing: State and Local
Perspectives and Recent Developments, Hearing before the Water
Resources and Environment Subcomm. of the H. Comm. on Transp. and
Infrastructure, 118th Cong. (Sept. 28, 2023) (written testimony of Mr.
James M. Proctor, II, Senior VP, Legal and External Affairs, and
General Counsel, McWane Inc., on behalf of United States Chamber of
Commerce).
---------------------------------------------------------------------------
Answer. There are several ways that wastewater can be used to
generate energy.
Biogas production: Wastewater treatment plants often produce biogas
as a byproduct of the treatment process. Biogas is a mixture of
methane, carbon dioxide, and other gases that can be burned to generate
electricity.
Anaerobic digestion: In anaerobic digestion, microorganisms break
down organic matter in wastewater to produce biogas. This process can
be used to generate either electricity or heat.
Fuel cells: Some wastewater treatment plants are using fuel cells
to generate electricity. Fuel cells use an electrochemical reaction to
convert the chemical energy in a fuel (such as biogas) into
electricity.

In addition, the most commonly discussed application is the use of
nutrient-rich biosolids, a byproduct of the wastewater treatment
process. Biosolids can be applied to agricultural lands as a nutrient-
rich fertilizer, providing essential elements like nitrogen,
phosphorus, and organic matter to improve soil fertility. Some
utilities have even made this type of fertilizer commercially available
for everyday garden fertilizing (e.g., Milorganite fertilizer produced
from treated sewage sludge from Milwaukee MSD). Other applications
include groundwater recharge, wetland restoration, and certain
industrial processes.

Question 2. You expressed concerns about the slow commencement of
projects in your testimony.
Question 2.a. What are some ways Congress can help streamline
permitting processes to move Clean Water SRF-funded projects forward?
Answer. Our nation cannot improve the state of water and wastewater
infrastructure especially in our most vulnerable communities without
permitting reform. The U.S. Chamber of Commerce launched the Permit
America to Build campaign to urge federal policymakers to streamline
permitting across the board, including wastewater projects under the
SRF and other Clean Water Act authorities.
Incremental efforts such as timebound reviews and simplifying
approval procedures for issues like the Section 401 certification and
Section 404 dredge and fill permits would be useful.
NEPA is by far the biggest obstacle to SRF-funded projects, such as
the installation of linear collection and distribution systems,
construction of new reservoirs, and siting new treatment plants.
Climate-resilient projects, such as floodplain management and flood
mitigation projects, have also been delayed by the NEPA review process.
Among other things, Congress should streamline the NEPA review process
by imposing deadlines for agency review, limiting page limits,
establishing a statute of limitation on the litigation process, and
increasing agency staff needed to review NEPA documentation.
In 2015, Congress passed the Fixing American's Surface
Transportation (FAST) Act which has proven successful with fast-
tracking many infrastructure projects. The Permitting Institute
chronicles many of those successes.\2\ We would encourage Congress to
consider replicating many of the streamlining provisions of the FAST
Act.
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\2\ Success stories available at: https://
www.permittinginstitute.org/success-stories.

Question 2.b. How important are critical minerals for moving
projects forward, and how can we increase critical mineral supply in
the United States?
Answer. A domestic supply of critical minerals and associated
processing is essential to meet our ambitious climate and
infrastructure goals and is integral to the nation's energy transition
and manufacturing sector. The U.S. Chamber held a critical minerals
summit to highlight the need to elevate critical minerals as a national
priority and to promote the importance of permitting reform to
advancing key projects. Here is a link to a blog summarizing the
outcomes from the event.
A recent report by ConservAmerica offered the following
recommendations:
Minerals for Clean Energy--The clean energy future relies on
minerals that must be extracted and refined in processing facilities.
American minerals--just like American energy--are more cleanly and
safely produced than in many other countries. To demonstrate that
superior environmental and labor performance, industry should work with
other stakeholders to evaluate voluntary programs that disclose,
certify, and promote the use of minerals produced under these higher
standards.\3\
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\3\ See ConservAmerica report titled Strengthening America's
Mineral Security: Net Import Dependence, Supply Chain Vulnerability,
and the Case for Critical Minerals, March 2022, available at: https://
static1.squarespace.com/static/5d0c9cc5b4fb470001e12e6d/t/
622a1d250cc6526f
5950b16e/1646927142692/CA_critical_minerals_wp_04.pdf
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Resources for Resources--The federal government must properly fund
and administer the various minerals programs that it has launched and
that have been authorized. For example, Congress and the public should
monitor and demand compliance with the mandated establishment of new
battery facilities, federal lending mechanisms, and mineral data
collection. Congress should also consider developing renewable-style
tax credits for minerals, as well as expedited permitting. Lastly, the
federal government must partner with our Canadian and Australian
allies, who also enjoy vast natural resources.
Strengthening Supply Chains--Partnering with our Canadian and
Australian allies, who also share the commitment to sound environmental
practices, must be a top priority. The United States should also
accelerate its domestic mapping program, consider a new civilian
stockpile for critical minerals, and continue to build relationships
with other mineral-rich partners.

Question 3. If private entities were able to access Clean Water SRF
funding, what would the effects be on clean water infrastructure?
Answer. The 15 largest U.S. private water companies invest $5
billion annually to improve community drinking water systems.
Providing access to CWSRF by private entities would offer
additional funding flexibility to communities and result in the
acceleration of rebuilding our nation's aging wastewater systems,
including financially distressed and disadvantaged communities. In
2020, Congress provided additional subsidy authority to the states
under the DWSRF. Although private entities are not currently eligible
for CWSRF funding, the Safe Drinking Water Act and Clean Water Act
allow states to transfer funds between the CWSRF to the DWSRF to
address their most pressing water needs. Under this flexibility, the
State of Delaware was able to provide funding to the Artesian Water
Company for the benefit of the Town of Frankford, a financially
distressed community. The funding was used for replacing regional water
mains, constructing a new regional water plant, and expanding its main
renewal program to incorporate Frankford while spending about $1
million on renewal projects. The project was so successful that
Artesian was awarded U.S. EPA's AQUARIUS Excellence in Community
Engagement Award. Changing the eligibility criteria under the CWSRF
would result in more projects such as this effort.
Question 3.a. What would the impact on the Clean Water SRF program
be?
Answer. Although the impact on the CWSRF program is currently
unknown, it is likely to be insignificant, as many private entities
will continue to pursue other forms of market and tax-exempt financing,
e.g., private activity bonds. From 2010-2020, only 2 percent of DWSRF
funds went to for-profit utilities.\4\ In addition, state SRFs have the
authority and discretion to decide what entities receive funding.
Toward this end, although the Federal Safe Drinking Water Act
authorizes assistance to privately owned community water systems, some
states have laws or policies that preclude privately owned utilities
from receiving DWSRF assistance.\5\
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\4\ See Government Accountability Office, Report GAO-21-291,
Private Water Utilities: Actions Needed to Enhance Ownership Data,
March 2021, available at: https://www.gao.gov/assets/gao-21-291.pdf
\5\ See Congressional Research Service, Drinking Water State
Revolving Fund: Overview, Issues and Legislation, Oct. 2, 2018, p. 2,
available at: https://crsreports.congress.gov/product/pdf/R/R45304

Question 3.b. Are there lessons to be learned from the Drinking
Water SRF?
Answer. Yes, the fact that the DWSRF program has not been adversely
impacted by expanding eligibility to private entities should alleviate
any concerns that opening CWSRF funding to such entities would impact
funding levels. Once again, each state has the authority and discretion
under both the CWSRF and DWSRF to determine which communities and
infrastructure projects are most pressing and worthy of funding.

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